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The death benefit is the amount of coverage stated in your life insurance policy that will be paid to the policies beneficiaries upon your death. Your death benefit can increase if you use policy dividends to increase your coverage amount. Your death benefit can decrease should you borrow money or take cash value out of your policy.

The cash value is the amount of money that builds up in a permanent or whole life insurance policy based on the premiums you have paid and/or additional insurance you purchase with earned dividends. The cash value on a policy starts small and may stay quite low in the early years, but will grow over time and at policy maturity equals the death benefit.

The cash value of a permanent or whole life insurance policy can be a resource to help pay college tuition or other expenses for your children's higher education. It can also be accessed to supplement retirement income.

• You can borrow from your cash value using a policy loan.
• You can surrender any or all of the additional insurance you may have purchased with past dividends. You will receive the amount of cash value related to that additional insurance.
• You can take future dividends in cash if your policy allows it. However, if you are still paying premiums on your policy, it may make more sense to use those dividends to reduce future premiums.
• If you cancel your life insurance coverage you can receive the cash value either in a lump sum or in a series of systematic payments. The cash value is reduced if there is a loan on the policy as the amount of the loan and any interest owed will be deducted.
• A permanent life insurance policy may be used as collateral for a loan from a lender, such as a bank, credit union, or savings and loan.

• You are charged interest when you borrow money from your cash value and when you die, the unpaid loan amount and unpaid interest will be deducted from the death benefit your beneficiaries receive.
• Borrowing against your polcy will likely reduce future dividends you receive.
• Borrowing from the cash value to pay interest on your original loan may incur tax consequences and possibly risk losing your coverage.
• There may be tax consequences as a result of taking past or future dividends in cash.

The living benefit (cash value) of your policy can helpyou while you are living. However, if the reason you purchased life insurance was to protect your family or business, or others that depend on you, then you may be defeating the purpose of the insurance by borrowing or accessing it's cash value. By leaving the policy intact you assure that your beneficiaries will receive the largest possible death benefit...your original intention.