Cash Value Life Insurance: Can Life Insurance also be an Investment?


A life insurance policy can be something that not just gives us peace of mind but that also allows us to save for the future of our loved ones. This is what a cash value life insurance policy can offer us. So, let us explore how it is possible for us to have life insurance, invest at the same time and what the benefits are.

What is Cash Value Life Insurance?

Cash Value Life Insurance is life insurance that provides a permanent life insurance policy, but also one that grows and earns a cash value just like a savings account does. This will be throughout your life. So, rather than have a savings account and a life insurance policy, you can have both combined into one. You are then investing for your family’s future should the worst happen. You are protecting them financially. It is the perfect peace of mind and the ideal form of investment in that sense. 

How Do Cash Value Life Insurances Work?

A Cash Value Life Insurance works by splitting the premium that you pay into three. You will have a cash value, the cost of insuring your life, and also the policy fees. You are not only contributing to a death benefit, that a family member would benefit from in the event of your death, but also building up an investment pot for their future. During your life, the amount of cash inside your investment will grow year on year, likely making it a larger amount in the end than it would have been as just a life insurance policy contribution.

Tax Benefits

Another advantage of Cash Value Life Insurance is that any interest, or gains from your investment, will be tax-deferred. The effect of this is that your life insurance policy is going to grow quicker than if it had been taxed every year.


With a Universal Life Insurance Policy, variable premiums can be paid. Policyholders will be able to adjust the death benefits that they have on the policy to their needs. The policy’s growth will be worked out on whichever value is greater, the current market interest rate or the minimum interest rate. It is invaluable that you can lower premiums should you go through a sticky financial patch in terms of household income. You can then keep the policy running when it is so important in terms of protecting your family financially going forward.

In terms of these Universal Life Insurance Policies, it should be noted that they do come in three different types – guaranteed, indexed, or variable. With a guaranteed policy, the pay-out will be uniform throughout the policy’s duration. Indexed policies will pay interest by stock market movements, allowing for greater potential in terms of growth, alongside tax-free gains. Then, there is the variable policy that will include in its components, cash value, investment, and flexible options. The policy stays in place throughout your life and as long as premiums continue to be paid in. It offers life-long protection.

So, a life insurance policy with benefits has to add to the pros of having a life insurance policy and can be considered more of an investment, the way growth is possible. It is primarily life insurance, though, in that life-long protection is provided for loved ones in the event of death. The tax benefits are to be noted and only add to the growth of the fund invested in the policy.

It is peace of mind to know that anyone left behind would not have to worry financially because you have considered what things would be like without the main wage earner in terms of contribution to the family budget. Income will not last forever, so savings in whatever form need to be available to loved ones left behind, who still have to find a way to survive financially. By investing in Cash Value Life Insurance or Universal Life Insurance Policies, you are being proactive in ensuring your family’s financial survival. Things could become hard enough and you are making sure that they don’t become any harder.