This reference value comes into play in the event of surrender or withdrawal of funds from a contract.
But how is it calculated and what exactly is its role?
Here are the answers.
Definition of The Cash Value Life Insurance
The cash value life insurance is, in a simplified way, the sum that the insured can receive in the event of a withdrawal or surrender on his life insurance policy.
It is an evolving amount whose value depends on the premiums paid and the various fees deducted from the capital.
Cash-value life insurance is calculated according to the capital invested, the interest generated, as well as the fees charged by the insurer.
The latter generally include social security charges and administration fees.
The cash value life insurance, also consists of a guaranteed value, allowing the subscriber to withdraw, if necessary, all or part of his capital before the end of the contract.
The amount of the surrender value is, in principle, made known to the insured as soon as the contract is taken out.
On the contracts in units of account, the insurer must communicate this value to the insured.
The cash value of life insurance varies according to:
The capital invested
- The insurer’s fees
- The type of contract
- The proceeds of the capital
The investor’s payments
The importance of the cash value in withdrawal operations.
Since the capital invested in life insurance is mobilizable, insurers apply a reference value in the context of operations.
Any mobilization of funds, whether it is a withdrawal or a surrender, partial or total, takes into account the cash value of life insurance.
This value corresponds to the maximum amount that the company can release to the insured.
In the case of an advance or loan, the amount granted by the insurer does not exceed the cash value either.
It is advisable to check with the company to find out the different terms and conditions that apply.
The cash value of life insurance is a reference value;
It determines the value of your life insurance;
It intervenes in case of withdrawal or surrender;
The cash value of life insurance can be partial or total;
It is an evolving value;
The guaranteed cash value life insurance is the minimum value of the contract;
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