Is Cash Value of Life Insurance a Liquid Asset?
Overfunding Your Account
There’s one additional financial strategy available to anyone with a permanent policy, although it’s most often used with whole life. If you’ve heard people asking, “Is cash value of life insurance a liquid asset?”, it’s often to do with this particular strategy.
After the first seven years you own the policy, you can pay more than the required minimum, which adds more money to your cash value. The caveat? You cannot overfund your policy in those first seven years or it will cause the IRS to reclassify your account and it will lose the benefit of tax-deferred growth!
The overfunding strategy helps your cash value grow even faster, earning more interest. Some high-net-worth clients use this strategy to grow cash value specifically so they can borrow against it for things like business ventures and other investments. We recommend talking with tax and financial professionals to get customized advice if you want to pursue this strategy.
Have more questions about cash value or permanent life insurance? Call us at (800) 521-7873 and let us answer them one-on-one! Or click the button below to get started with a free quote.
