Is like a special savings account?
In: Economics
There are two types of life insurance, whole and term.
Term life insurance is basically “You pay X premium and if you die while you are covered, your heirs get Y”. So, you pay $200 a year or whatever, and your kids get a quarter million dollars if you die. Obviously this goes up as you get older.
The other kind is whole life which is basically a scam but not completely. Essentially it’s just an investment account that is invested in treasuries or something similar. Every month, they pull out a term life insurance fee from it. In other words, you could just have a brokerage account and a term policy and do the exact same thing yourself. To make it even worse, they have really high management fees typically while a brokerage account usually has none.
To make it worse, they often prey on old people and have them take out policies against their children and grandchildren when they think they are taking out a policy against themselves.
Now to answer your question, because a whole life policy is nothing more than an investment account with high fees and mandatory withdrawals for a term policy, you can cash it out at any time for its face value.
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