Where can a life insurance policyowner derive supplemental income?

A life insurance policy can serve as a valuable financial tool, particularly through its cash value feature. When a policyholder has a permanent life insurance policy, such as whole life or universal life, a portion of the premiums they pay contributes to the cash value of the policy. This cash value grows over time, typically on a tax-deferred basis, and policyowners can leverage it as a source of supplemental income.

The cash value can be accessed by the policyowner through policy loans or withdrawals, allowing them to utilize it for various personal financial needs, such as funding retirement, education expenses, or even emergencies. Since this source of income is derived directly from the policy’s inherent features, it offers a unique advantage that many other financial vehicles may not provide.

The other options do not accurately represent a reliable way for a policyowner to obtain supplemental income directly tied to the life insurance policy. Premium payments are the amounts paid to maintain coverage, and while investment returns could potentially contribute to the growth of the cash value, they do not directly relate toward deriving income. External sources might provide income but are not connected to the life insurance policy itself. Therefore, the cash value stands out as a primary means for policyowners to extract supplemental income from their life insurance.