A commenter told me a high-yield savings account beats cash value life insurance as a way to be your own bank. He pointed out that a savings account charges no commission and no fees, and all of it is there on day one. Those are fair points, and each one gets a reply in a video comparing cash value with a high-yield savings account. An emergency fund is where the comparison matters most, because it's money you hope you never touch.
A high-yield savings account pays more when the Federal Reserve's rates are up and much less when they come down. For most of the 2010s, the average savings account paid well under 1%. The rule of 72 gives a quick feel for what that means: divide 72 by the rate, and you get roughly how many years it takes money to double. At 2%, it takes 36 years. At 1%, it takes 72. The interest is also taxed every year, whether you spend it or not.
On the whole life designs I build, I expect the cash value to grow at about 4.5% to 5.5% a year over 30 years, measured as an internal rate of return. An internal rate of return is the single yearly rate that would turn everything you paid in into what the policy holds. At 5%, money doubles in a little over 14 years. That's a projection rather than a promise. It depends on dividends, which aren't guaranteed, and a dividend rate is a different number from your return, as covered in what a 6.6% dividend rate actually pays you.
I wouldn't move the whole fund at once. Spreading $50,000 over seven years means a little over $7,000 a year. The seven years matter because tax law tests the first seven years of premium, and a policy that takes in too much too fast becomes a modified endowment contract, or MEC. A MEC loses the tax-free treatment of policy loans.
In year one of the example from my video, $7,000 goes into the policy. On the designs I build, 80% to 90% of that shows up as cash value in the first year, so call it $6,000. Savings drops to $43,000, and your total is about $49,000, a little behind where you started. But the policy carries a death benefit from the first day, $150,000 in that example. If you died that year, your family would get the $43,000 plus the $150,000, and the death benefit generally isn't subject to income tax.
By year two, about $14,000 has gone in, the cash value is around $12,000, and $36,000 is left in savings. You're still slightly behind a savings account. Around year five, these designs usually reach break-even, which means the cash value is more than the total you've paid in. At that point $35,000 has moved and the two plans are about even. By year seven, the whole $50,000 has moved, and the projected cash value is a little ahead of what went in and growing from there.
After year seven, you can stop paying premiums by making the policy reduced paid-up. The death benefit drops to the amount your cash value fully pays for, no more premium is due, and dividends keep buying small amounts of paid-up insurance that add to both the cash value and the death benefit. To use the money, you take a policy loan, which needs no credit check and no approval. A loan does charge interest, and it reduces the cash value and death benefit until you pay it back.
It isn't instant money, though. A policy loan takes a few days to reach checking, so keep enough in savings or checking to cover the first week of an emergency. How much cash to keep at home sorts emergency money by how fast you'd need it.
Decide how much of your emergency fund you'd need within a week, and leave that in savings. On a $50,000 fund with $10,000 kept back, the policy would take about $5,700 a year for seven years.