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How Does Cash Value in a Life Insurance Policy Really Work?
When you own cash value life insurance, your premium payments are allocated three ways. First, a portion of each premium pays for the actual insurance costs. Like term insurance, a specific cost is associated with the policy's death benefit, based on your age, health, and other underwriting criteria. Second, a portion pays for the insurance company's operating costs and profits. The remainder goes toward the policy's cash value.
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