Have you ever wondered how the cash value benefits you or your family? Chances are, it does not and never will.

First, if you take it out while you are alive, the policy could terminate early. Worse, when the cash value drops to zero, the policy will terminate.

In other words, the insurance company is forcing you to build up cash value, but odds are, you can’t use it. This requirement that you build up cash value also adds to the premium.

It also may surprise you that the cash value is not added to the death benefit when you die. A life insurance 1035 exchange puts the cash value to better use by using it today, to purchase a more cost effective policy. (Assuming you can find one and you are healthy enough to qualify.)

One other interesting note: some newer guaranteed policies do not require any cash values. The net effect is a lower premium.