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Whole Life Insurance

How does the cash value in a whole life insurance policy work?

A portion of each premium payment goes toward building cash value, which grows slowly over time at a guaranteed minimum rate set by the insurer, and may grow faster if the policy pays dividends (common with mutual insurance companies).

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You can typically access this cash value while you're still alive through a policy loan or withdrawal, though unpaid loans reduce the death benefit if not repaid.

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Cash value growth is usually slow in the early years of the policy, since a larger portion of early premiums goes toward the cost of insurance and fees rather than building cash value.

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