Please explain it and tell me if it’s a good idea or bad idea? This would help so many people.
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Cash value life insurance is only a good idea if you *really* want/need life insurance to the point that you’re willing to pay for it even before paying for things like rainy day funds or retirement accounts. It is essentially a permanent life insurance policy that gives you some flexibility to reduce its value if you need the money for an emergency. In return for this flexibility, you pay extra.
Whether you want to buy permanent life insurance is a personal choice that depends on your life circumstances. There are two primary questions to ask:
1. Is there anyone who current depends on me financially?
2. Will that person likely depend on me financially for their entire lives?
If the answer to (1) is no, then life insurance is useless to you. If the answer to (1) is yes but (2) is no, you probably just need term life insurance, which covers you for the period when someone (like a child) is financially dependent on you but can expire once they are independent. Permanent life insurance only makes sense if you expect someone to be a permanent dependent, like a child or family member who is disabled. If that would strain your budget, cash value permanent life insurance might serve as a way to buy the permanent policy, keep it at full value if you can, but draw it down if necessary. Though again, you pay extra for that kind of flexibility.
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