Cash value term life insurance is a type of term life insurance which provides coverage for a specified period of time. The length of your policy’s term depends on the life insurance product you select.
Like traditional term life insurance, a cash value term policy only provides a death benefit if you die during the term of coverage. But unlike traditional term life insurance, cash value term life insurance also builds cash value you can use in these important ways:
- If you reach a point where you no longer need coverage, you can turn in the policy and receive the cash value to add to your retirement savings or to use in any other manner you see fit. Current tax laws allow you to receive cash surrender value, up to the total amount of the premiums you paid, tax-free.*
- You can apply your cash value to purchase reduced paid-up term insurance to age 95. This allows you to maintain some of the death benefit to cover final expenses or provide a legacy for your heirs with no further premium required.
You also have the option to continue the full amount of death benefit at rates substantially below the level charged by traditional term plans for keeping coverage beyond the initial specified level premium period.
Contact a Horace Mann insurance agent to discuss your life insurance needs.
* Amounts received in excess of premiums paid are taxed as ordinary income. If the policy is a modified endowment contract (MEC), earnings, if any, are taxed first and an additional 10% penalty tax may apply if the policy is surrendered for its cash value before age 59½. You should consult with your tax advisor for more information about the taxation of life insurance.