How to Get Cash From Your Life Insurance Policy

Four ways to tap life insurance cash value:

Should your policy be well mature to have some cash value, you can smile in times of need and just tap in. This move differs from one insurance company to the other so, make sure to contact your agent and do some proper research before making some moves. Here are four options to consider in this regard:

• Surrender the policy:

You can cancel your life insurance policy and receive the surrender value. That is the cash value with any fees applicable deducted out from it.

When you go for this option, it simply means you are no mare under the coverage of the policy. Your family won’t also get a dime as your death benefit should you kick the bucket.

A penalty payment could be attracted when you surrender a policy and this is very dependent on the number of years or time you’ve been paying your premiums. If your payout is more than the premiums you paid, you could owe income tax on that gain.

It is never a good idea to surrender your policy however if you think you no more need it, then you can hit hard at it.

• Make a withdrawal:

You can make some part withdrawals in a whole life policy without having to surrender or cancel the policy.

When this happens, your family will receive part or reduced death benefit when you kick the bucket or die. You won’t in this case owe income tax on the withdrawals up to the amount of the premiums you have paid into the whole life insurance policy.

This move is also referred to as a partial cash surrender.