What are the pros and cons of cash value life insurance policies?

Answer 1

Term LIfe insurance! DO NOT,  I REPEAT, DO NOT BUY ANY other TYPE OF LIFE  insurance. "Cash Value" is a colossal waste of money!! 

The three evil of Whole life.  

1. you do NOT get a keep the "cash value" 

2. BAD investment (low rate of return)

3. You will pay 6%-8% to borrow your own money

If you have a Whole life, cash value, Unversal life, Variable life. NOT GOOD! Lets get together and talk! ITS NOT WHAT I TELL YOU, ITS WHAT I CAN SHOW YOU IN YOUR POLICY!!  

Answer 2

Pros- More bang for your dollar. You're not throwing money away.  Keep in mind that a universal life policy (cash value) policy is still life insurance first and that should be the initial intent.  If you can afford it at a younger age then do it because you're normally getting a guaranteed interest rate of 2-3%, and a non guaranteed rate of 4-5%.  If you can find me a bank that can do better I'd like you to try.

Also the flexibility of the policy is a large pro.  Say you purchase a 200,000 universal life policy at age 30. Now you're 65 and have no where close to a need for that much insurance.  Your cash accumulation stands at 25,765.  Stop paying premiums at 65, drop the face amount down to 25,000 and the policy will probably run to age 100

The main con is simply affordability.  Most young people who have a large need for life insurance just can't afford it. I also don't recommend taking loans on the cash value, 8% pay back is just not worth it

Answer 3

Any financial expert will teach you to Buy Term and Invest the Difference. You get the most amount of coverage for the least amount of money. Invest the difference and bypass the insurance companies low rates of return. Anyone telling you otherwise is a life insurance agent trying to make more money off you. Most Cash Value life insurance agents aren't bad people, they have just been trained to sell the wrong, more profitable stuff for the company. I would certainly watch out for anyone who really knows how it works and STILL sells it.

Check out Suzy Orman and Dave Ramsey on Youtube. Listen to their advice on Cash Value Policies.