What Does Emergency Fund Mean?
An emergency fund, in the context of insurance, would refer to the feature in permanent life insurance policies that allow the insured to withdraw cash for the purposes of paying unexpected expenses or fulfilling other monetary needs. Moreover, a life insurance policy generally can serve as a last resort emergency fund.
Insuranceopedia Explains Emergency Fund
There are types of life insurance policies that allow the insured to get immediate cash when needed, even if the insured person is still alive. For instance, permanent life insurance allows the insured to borrow against the cash value of the policy. Another option for getting emergency cash through life insurance is cancelling the policy by withdrawing its cash value. In addition, the insured can sell their permanent life insurance policy to receive money to use it as emergency fund. Some unexpected life events wherein an emergency fund would be helpful include abrupt unemployment, house or car repair, and medical expenses.