Does your money grow in life insurance?

Yes, your money can grow in certain types of life insurance policies through the cash value component. Unlike term life insurance, which only provides a death benefit, permanent life insurance policies like whole life, universal life, and variable life insurance accumulate cash value over time. Here’s how the cash value grows in life insurance:

1. Whole Life Insurance

In whole life insurance, the cash value grows at a fixed rate set by the insurer. Part of your premium goes toward the death benefit, while another part is invested in the policy’s savings account. Over time, this balance grows:

• The growth is guaranteed and stable.
• Policies can also pay dividends, which can be used to increase the cash value.

The longer you hold the policy, the more your cash value grows.

2. Universal Life Insurance

Universal life insurance offers more flexibility and allows the cash value to grow based on interest rates set by the insurer or tied to a market index. You can adjust your premium payments, which can speed up or slow down cash value growth. Universal life policies offer:

• Flexible premiums
• Cash value growth based on market interest rates

The cash value grows more quickly if you pay higher premiums.

3. Variable Life Insurance

In variable life insurance, your cash value grows based on investment performance. You can choose to invest in various sub-accounts like stocks, bonds, or mutual funds. The potential for growth is higher, but so is the risk. If your investments perform well, your cash value grows faster, but poor investment choices could cause it to decline.

4. Indexed Universal Life Insurance

Indexed universal life insurance ties cash value growth to a stock market index, like the S&P 500. The cash value grows based on the performance of the index, with limits on gains and protections against significant losses. This allows for growth with less risk than variable life insurance.

How Does Cash Value Grow?

The cash value in these policies grows over time, offering you several options:

• You can borrow against it in the form of a loan.
• You can make withdrawals (though this can reduce your death benefit).
• If you surrender the policy, you can receive the full cash value, minus any fees.

Yes, your money grows in permanent life insurance policies like whole life, universal life, variable life, and indexed universal life through the accumulation of cash value. The growth can be stable and guaranteed in whole life policies, while it fluctuates with market performance in variable life policies.