Life Insurance Cash Value: A Practical Discussion
by Peter Katt
As readers of my AAII articles know, I believe the best way to understand the maddeningly complicated life insurance asset is to present various anecdotes on specific issues.
In this spirit, several recent client encounters about aspects of life insurance cash value has prompted me to discuss cash values—not in a historical and comprehensive sense, but with narratives to provide a better practical understanding of cash values for owners of life insurance policies.
It’s My Money and I Want It Now
A client I will call Stan came to me furious because he was being charged interest on cash value loans from his participating whole life policies. Recently, his agent told him that without either premium or loan interest payments his policies would terminate. Stan was furious because of his insistence that no loan interest be charged, since it was his money and he viewed the cash balance like a bank account.
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