Hello and thanks for asking about your cash value life insurance policy.
A cash value policy "worth" $50K means that upon your death, the benefit paid out is $50,000. This is also called the Death Benefit.
A whole life or cash value life policy is really two things in one--a term life insurance policy. plus and investment component. In order to be tax free on the investment side, these two components are combined into one financial product call cash-value life insurance.
When you make your premium payment, the premium is divided into two buckets: The life insurance premium and the investment bucket.
Currently, the amount you pay in premium is just enough to cover the life insurance itself. Since your young, a small portion of your premium goes to your investment side.
If you were to pay in more premium than you are paying now, all of the additional goes to the investment side.
When you pass away, in addition to the base death benefit of $50K, your beneficiary also gets any cash value on the other side (in this case the $492).
The policy allows you to take a loan against the cash value side only. This gives you cash, but with no tax effect. You can choose to pay back the loan, or let it ride unpaid. If you die when the loan is unpaid, your death benefit goes to pay the loan back first, then whatever remains goes to your heirs.
If you were to cancel the policy today, you would get only the $492 back, minus a service charge.
Have I naswered your convern about whole life insurance today?
Have I answered your concern, rather?
So, I would only be able to take a loan out against the $492. Is that correct? There is no way to take, say, $15000 out now and take my policy down to $35,000?
And then work on paying that $15000 back over time?
The $50K is not yours until you die, I'm afraid.
If you were to stop paying the policy after you hae borrowed the insurance company's money, they would have no way to get it back. You can only borrow your money.
Besides, borrowing the money and having to pay it back...how would that be different than a credit card debt?