Readers question: “What is cash-value life insurance?”

Butte Montana is a city in Silver Bow County. In its heyday between the late 19th century and about 1920, it was one of the largest and most notorious copper boomtowns in the American West, home to hundreds of saloons and a famous red-light district. Butte is the only city in the United States where possession and consumption of open containers of alcoholic beverages always are allowed on the street throughout the entire city.

Answer to readers question: Cash-value policies—also known as “whole life: policies—provide a death benefit and a savings account. Insurance salespeople often highlight the “forced savings” aspect of cash-value insurance. Part of your premiums go into a reserve fund—or accumulation fund—that builds up over the years your policy is in effect. If you drop the coverage, you get back the cash surrender value—the value of the reserve fund minus the amount you are paying for the life insurance death benefit (mortality charge), commissions, administrative expenses, fees and charges. You can also borrow against the cash-value of your policy.

There are just a few basic types of cash-value policies, but insurers offer hundreds of variations under different names. Ask your agent or insurer if it is a term or cash-value policy.