Considerations

• When considering whether you wish to purchase term or permanent insurance, one consideration is whether you wish to have an accumulation of cash value over time. Although term insurance is usually much less expensive than permanent insurance, it does not build any cash value. You are paying strictly for the insurance protection and will have nothing to show for it at the end of the term.
  
  

Size

• A number of factors will influence the amount of cash value available to you. The longer your policy has been in force, the more time there is for cash to accumulate. The larger the face amount of the policy, the more cash that is likely to build up, because your premiums will also be larger.
  
  The type of policy also is a factor. The cash value in plans such as universal life or variable life can fluctuate over time because of changes in interest rates and investment results.
  
  

Access

• There are a number of ways to access the cash in your policy. You can take a portion of the cash as a policy loan, which does not need to be repaid but will decrease the face value of the policy by the amount of the loan plus interest. Plans such as universal life will allow you to make a partial withdrawal. If you no longer wish to keep the policy, you can also surrender it and receive the cash value minus any surrender charges.
  
  

Benefits

• Benefits of cash-value life insurance include the "forced savings" element, which can help people who are not good at saving money on their own. Because cash-value plans are permanent, this also means that you don't have to worry about your coverage expiring, as term insurance coverage does. As a result, you'll keep coverage throughout your life even if your health declines.
  
  

Expert Insight

• According to The Motley Fool website, cash-value life insurance should not be purchased as an investment vehicle, because the higher insurance costs limit the amount of cash that accumulates. If long-term investment is your goal, a better option is to purchase lower-cost term insurance and invest the premium savings in vehicles such as mutual funds.