Which type of life insurance policy generates immediate cash value?

If you're wondering which type of life insurance policy generates immediate cash value, you have a few options. Single premium whole or universal life insurance policies are virtually the only options for immediate cash value life insurance. Even so, you could secure immediate life insurance coverage with a no exam term or whole life insurance policy.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Jan 30, 2022

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Quick Facts

  • You will need a single premium policy to obtain a life insurance policy with immediate cash value
  • Only permanent life insurance policies, like whole and universal life insurance, offer cash value
  • There are whole and term life insurance policies with no waiting period if you simply want immediate life insurance coverage

If you’re in a rush to find a permanent life insurance policy, you might be wondering which type of life insurance policy generates immediate cash value. Life insurance waiting periods can cause issues if you suddenly pass before your cash value or death benefit is available.

Waiting for a product you’ve already purchased can be frustrating, even in the case of life insurance. This article will highlight the immediate cash value life insurance options, so that you won’t have to worry about any waiting periods.

Are you ready to discover which types of life insurance policies build cash value? Continue scrolling or enter your ZIP code above to acquire free quotes from the top life insurance companies near you.

Where can I get immediate cash value life insurance?

For starters, the life insurance policies that offer immediate cash value will be permanent life insurance policies such as whole or universal life insurance. For those that aren’t familiar, term life insurance doesn’t have a cash value component although the death benefit sometimes has a waiting period as well.

The cash value component is typically not available immediately because only a portion of your permanent life insurance policy will go toward the cash value component. Similar to a traditional checking or savings account, the value of your account will slowly accrue over time, assuming that you don’t make any withdrawals.

So, how do you get a life insurance policy with immediate cash value? You would need to purchase a single premium life insurance policy to have immediate cash value available. If you purchase a single premium life insurance policy, the policy itself is no different than if you were to pay monthly premiums.

The major difference is that your policy goes into effect immediately, including your cash value. Keep in mind that you will be paying more in premiums than your cash value is worth. This is because permanent life insurance policies still have a death benefit that you’ll need to cover.

Which life insurance companies are best for immediate cash value policies?

Many companies that offer permanent life insurance will offer single premium payment options but, for whatever reason, many companies don’t advertise this option. Of the life insurance companies that offer single premium life insurance, many are considered smaller companies.

These are some of the life insurance companies that advertise having immediate cash value:

  • State Farm
  • Illinois Mutual
  • Oxford Life Insurance Company
  • Western Southern
  • Prosperity Life
  • ELCO Mutual

As you can see, most of the companies listed above aren’t particularly well-known nationwide. State Farm is the major outlier with a significant market share in the life insurance industry.

In fact, State Farm barely falls within the top 10 whole life insurance companies by market share. The other companies listed above weren’t even within the top 20.

Top 10 Whole Life Insurance Companies by Market Share
CompaniesDirect Written PremiumsMarket Share
Northwestern Mutual$10,517,115,4526.42%
Metropolitan Group$9,821,445,9536.00%
New York Life$9,925,848,3005.68%
Lincoln National$8,769,303,7745.36%
John Hancock$4,640,905,0172.83%
State Farm$4,633,004,9632.83%
Minnesota Mutual Group$4,422,100,0282.70%
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Keep in mind that not all companies will advertise their payment options. If you’re looking for a good company that offers single premium life insurance, the large companies listed above would be a safe place to start. You won’t have much to lose other than a little time.

Should I buy life insurance with immediate cash value?

Purchasing a life insurance policy is almost never a bad idea as long as you are prepared and communicate with your beneficiaries. This is especially true in reference to single premium life insurance policies.

According to the Insurance Information Institute, some life insurance policies go unclaimed because beneficiaries are unaware of the policy or the company no longer exists. These are merely a couple of reasons that could deter you from purchasing a single premium life insurance policy.

How does a single premium policy make matters worse? If the policyholder were to die unexpectedly without informing their beneficiaries of the life insurance policy, there are fewer ways to identify that a policy was in place. And if you reviewed monthly bank statements, there wouldn’t be any transactions from an insurance company to alert loved ones of an existing policy.

In addition, there may not be a mail trail without any new statements. In either case, a policyholder who doesn’t inform their beneficiaries of the policy could be doing everyone a disservice. On the other hand, paying for a life insurance policy in advance could lead to other financial issues.

If the insurance company is sold or collapses, you might have a difficult time getting a refund or the benefits you’ve paid for. This is why it might not be a great idea to buy a single premium life insurance policy from a smaller company like those listed above.

Other Options for Immediate Life Insurance

While your options are limited for life insurance policies that offer immediate cash value, there are other life insurance policies that are immediately available without cash value.

There are different options for life insurance with no waiting period. If you’re set on a whole life insurance policy, you can secure one without a waiting period on the death benefit, but the cash value component won’t be available until you make some payments.

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Similarly, term life insurance is available with no waiting period. Whether you select whole or term life insurance, these will most likely need to be no exam life insurance policies which tend to be slightly more expensive. You will also have different payment options such as level, increasing, or decreasing premiums.

What does level refer to in level term insurance? Whether you’re buying a term or permanent life insurance policy, the term level simply means that the premiums won’t change over time.

Many whole life insurance policies have decreasing premiums, so that the insurer secures the bulk of the premiums sooner rather than later. Therefore, level premiums could be relevant for either type of policy.

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Life Insurance with Immediate Cash Value: The Bottom Line

It’s not always practical to purchase life insurance with immediate cash value, unless you can afford to pay for an entire policy up front. There are other options for life insurance without a waiting period.

By now, you should know which type of life insurance policy generates immediate cash value and where to acquire one. Before you go, enter your ZIP code below to obtain free quotes from the best life insurance companies in your area.

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