If you’re wondering which type of life insurance policy generates immediate cash, you have a few options. Single premium whole or universal life insurance policies are essentially the only options for life insurance with immediate cash value.
But to start with, which type of life insurance generates immediate cash? Well, this policy builds cash value upon issuance because the total premium is paid when the policy is issued, and the cash value component is able to grow immediately.
Cash value can also be built by whole or universal life insurance, but gradually as the premiums are paid. Term life does not accumulate cash value.
More About Life Insurance Policy
It’s purchased for a lump sum, which gets to grow cash value immediately. While they too contain cash value, it’s built up over time through regular payment of premiums and interest accrual.
They’re term policies and are largely the issue of paying a death benefit, with no accumulation of cash value. If you do not have sufficient time to purchase a permanent life insurance policy, you might be wondering what type of life insurance policy builds cash value immediately.
Waiting periods on life insurance can cause you problems in the case of your death, unexpectedly, before your death benefit or cash value can be accessed.
Instant Cash-Value Life Insurance: Where Can I Get It?
Firstly, life insurance policies that will possess cash value from day one will be permanent life insurance policies, such as whole or universal life insurance.
For information’s sake, term life insurance will not possess a cash value component, although the death benefit may have a waiting period as well.
The portion of the cash value isn’t generally available immediately because you will only have a percentage of your permanent life insurance policy invested in the cash value portion.
Similar to the typical checking or savings account, your account value will accumulate over time, assuming that you don’t make any withdrawals.
How to Get Immediate Cash Value Life Insurance Policy
You would need to purchase a single-premium life insurance policy in order to gain immediate cash value. If you purchase a single premium life insurance policy, the actual policy itself is not any different than if you pay premiums monthly.
The primary difference is that your policy becomes effective from day one, along with your cash value. Keep in mind that you will be contributing more toward premiums than your cash value. This is because permanent life insurance policies still have a death benefit that you will be paying for.
Which Life Insurance Companies Release Cash Immediately?
Most individual life insurance companies will offer a single premium payment option, but, for one reason or another, most companies do not offer this as an option. Below are some of the life insurance companies that offer that they have immediate cash value:
- State Farm
- Illinois Mutual
- Oxford Life Insurance Company
- Western Southern
- Prosperity Life
- ELCO Mutual
Of the life insurance companies that do offer single-premium life insurance, most of them are viewed as smaller companies.
As you can see, most of the firms listed above are not particularly well known throughout the nation. State Farm is obviously the big exception with its mammoth market share in the life insurance business.
Should I Buy Life Insurance with Cash Value Immediately?
Purchasing a life insurance policy is never a bad idea as long as you are prepared and have had a discussion with your beneficiaries. This is especially true when it comes to single premium life insurance policies.
Other life insurance policies go unclaimed because beneficiaries aren’t aware of the policy or the firm has gone out of business, reports the Insurance Information Institute.
These are just a couple of examples of why you may not purchase a single premium life insurance policy. (For more on how to find an unclaimed life insurance policy, see our “How to Find an Unclaimed Life Insurance Policy”).
In what way does a single premium policy cause more harm? If the policyholder were to pass away suddenly without making his or her beneficiaries aware of the life insurance policy, there are fewer sources of acknowledging that a policy was in place.
And if you examined bank statements on a month-to-month basis, there would be no payments from an insurance company to alert loved ones of the policy being in place.
In addition, there could be no mail trail with no new comments. Either way, a policyholder who does not make their beneficiaries aware of the policy may be doing all parties a disservice.
If the insurance company gets sold out or goes bankrupt, you will not be able to recover your money or the benefits you have paid for. That is why it might not be such a bright idea to buy a single premium life insurance policy from such a small company like the ones described above.
Last Words
To secure whole life insurance with an immediate cash value, single-premium whole or universal life insurance policies are ideal.
The policies require a single payment in a lump sum, and this gives the policyholder immediate access to the cash value. The insurance is suitable for those who desire the option of easy availability of funds, but also desire to leave an extended death benefit to their heirs.
Unlike term life insurance, which does not have a cash value component, whole life insurance provides a guaranteed return on investment rate immediately the policy takes effect.
While searching for the best cash value life insurance, it is essential to analyze the financial health and reputation of the insurance company. Good-quality companies offer policies that not only give cash value upon maturity but also appreciate the cash value already accumulated at a good growth rate.
This implies that the policyholder’s investment makes a profit in the long term, giving a guaranteed means of obtaining funds to take care of emergencies or planned expenditures.
Lastly, high-yield life insurance policies are particularly attractive because they combine the security of a life insurance policy with the opportunity to grow as a financial investment.
