How To Find Out How Much Your Life Insurance Is Worth

While nothing comes risk-free in life, you can, however, taking a precautionary measure for safeguarding your loved ones after your death is advisable. It is a rite of passage that, sadly, no one knows when it strikes. After undertaking a life insurance plan, you rest assured that you have a safe financial landing in any unforeseen eventuality in the long term.

It also eases the burden of bearing extreme financial commitments your family might experience if you pass on. Several attributes play a significant role in how your life insurance worth plays out with the above in mind. It translates to more than paying your premiums on time as you build up your life insurance policy claim.

The Cash Value Depending on Your Policy

One of the greatest attributes in determining your life insurance worth is the cash value. In this policy, you have an investment option, mostly like a savings nest. Thus, your policy can earn interest, withdraw the money, or sign against it when borrowing a loan. However, it is essential to note that term life insurance lacks this feature.

Insurance plans you can benefit from include whole life insurance, indexed universal life insurance, variable universal life insurance, and even universal life insurance. The face value of your life insurance is from the death compensation, which is given out to your beneficiaries upon your unforeseen death. However, while still alive, you can access your money, which gives your policy more worth.

For instance, you can request a withdrawal or even take up a loan to settle other financial obligations. Additionally, you can also surrender your policy upon request for a particular requisition under the cash value policy to pay your premiums.

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It is essential to note that your cash value increases with the timely payment of your premium. However, the cash value stops growing after your death. Your cash value’s withdrawal limit is exempt from tax until you meet the threshold in which you have paid money. 

Furthermore, your cash value that will determine your life insurance worth will vary from one policy to another. For instance, like the article on life settlement calculator aptly addresses, your cash value gradually increases at a fixed rate in whole life insurance, which your insurer determines. Plus, it reaches optimization upon the maturity of the policy.

On the other hand, the cash value that determines your universal life insurance’s worth depends on the insurance market rates and the overall performance of your insurance company. For the indexed universal life insurance, your cash value cost relies on your policy index’s performance. Lastly, the cash value grows with investment portfolios by your insurance company for the variable life insurance. The above translates to the overall worth of your life insurance.

It is also essential to note that the worth of your cash value decreases with unpaid loans. 

The Face Value

The face value in determining your life insurance worth is the death benefits to your beneficiaries. It varies from one insurer to another, with others giving a better incentive to increase the face value in death due to a particular incident. Plus, it is typically tax-exempt in most scenarios.

You get the face value of your insurance worth in your statement of benefits, which also determines the premiums you give. When your cash value grows, your face value also increases.

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Size of Your Insurance Policy

The premiums you remit have a direct proportional influence on your insurance worth. If you pay $1000, you will get a higher value than your life insurance’s face value at $500. Furthermore, your life insurance worth is higher, the more you pay your premiums.

Your Physical Well-Being

Your age greatly determines the worth of your life insurance. Typically, the younger you are, the lesser the value your life insurance offers. It is mainly dependent on the risk factors that associate with old age. Additionally, your insurance value increases with the susceptibility of diseases and with the lowering life expectancy you age. The more your health reduces as when you first took the cover, your policy’s value increases.

Your lifestyle also influences your life insurance worth. If you have a healthy weight that falls within a good body mass index (BMI), your policy value decreases as you have a lower risk of having lifestyle diseases, leading to death. Plus, keeping away from alcohol and smoking gives you an upper and on calling the shots in your health.

When you determine your life insurance worth, it helps you evaluate whether you will have excellent financial standing and your loved ones, too, in your absence. Plus, you can also make the necessary financial decisions that will favor you. Knowing your life insurance worth also gives you an estimate of what you would expect from a buyer if you are looking to sell.

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