A question often asked by people buying guaranteed cost, low cash value, life insurance is, can selling life insurance be an alternative to having a high cash value policy?
Non-taxable life insurance cash values had once been the corner stone of the life industry. Using cash values to accumulate a living benefit was the way agents were selling life insurance to our fathers. People really don’t think they are going to die, so selling a life policy (death insurance) was made easier by promoting the tax free build-up of the contract’s cash value. Life insurance became a supplement to retirement.
The first high cash value policies were endowment contracts, which usually matured at age sixty-five. This was the age when the mortgage was paid, the kids were married and on their own, and golf was the last great challenge. It was also a time when a six bedroom house cost $29,000 and a new car, with whitewalls and a radio, was only $1200.
Today, we don’t sell much life insurance for its cash value, but people still ask where it went when they see an illustration with a zero surrender value. I simply tell them, it didn’t go anywhere, you just never paid for it.
The good news today is you can have your surrender value without paying extra. This is where selling life insurance has actually helped cut the cost of today’s coverage. If you want to cash out of your contract, selling the policy is generally far more profitable than surrendering it for its cash value.
If you are interested in selling life insurance, please click our LIVEpdq.