what is meant by cash value per 1,000.00 of insurance?
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Asked December 9, 2015
It's important that you understand what cash value" means before any discussion of the $1,000 limit. Companies use the phrase to describe the dollar and cents value of a term life insurance policy to the policyholder if he/she decides to cancel the policy or apply for a loan against it. Your insurance company should outline the total cash value or the calculation it uses to determine cash value in your policy. Your annual statement might also provide this information.
The phrase “cash value per $1,000.00” refers to the amount available per every $1,000 you paid in premiums. Most insurance companies write policies that prevent you from receiving any money until you've paid at least $1,000. Even if you pay that amount or the death benefit is $1,000, you might still need to fulfill additional terms, such as paying additional premiums for a preset number of months or years, before the policy has any cash value. A variety of factors affect the value amount, including the policy's age, the death benefit and the number of premium payments. The insurance company also deducts management fees. When the cash value becomes available, you receive the calculated amount based on every $1,000 you paid to the insurance company. Again, you don't receive a $1,000 for every $1,000 paid in premiums. Instead, you receive a lesser amount based on the agreement outlined in your policy.
If you need to cancel your insurance to obtain funds for an emergency, you might not receive the money when you need it - some insurance companies wait months to pay policyholders. Additionally, if you're paying on a loan taken out against the cash value, you only receive the amount remaining after the company deducts the outstanding balance from the total.""
Answered December 11, 2015 by tim