What To Know About Cashing In A Life Insurance Policy

During difficult financial times people may need to have immediate access to a source of cash.  This article discusses the issues with cashing in a life insurance policy to meet immediate income needs.  “Cash-value life insurance, such as whole life and universal life, builds reserves through excess premiums plus earnings.”  There is a cash-accumulation account within the policy that holds these deposits.  “Learn the differences between these two types of insurance in Permanent Life Policies: Whole Vs. Universal.”  This article describes some of the consequences that can occur with cash-value withdrawals from a life insurance policy.  It also describes how most of the cash-value insurance policies permit people to borrow money from the issuer by using their cash-accumulated account as collateral.  People can also surrender (cancel) their policies in certain circumstances.  Finally, this article describes the life settlement concept. 

See David Rando, Cashing in Your Life Insurance Policy, Investopedia, May 1, 2016.