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Can I Turn in my Policy for the Cash Value?

Can I Turn in my Policy for the Cash Value?

Permanent life insurance comes with many benefits. Those benefits of whole life include having a life insurance policy that is permanent, as well as one that gains cash value. The cash value is a very unique and important part of the whole or universal life insurance policy. It is actually one of the draws to this form of coverage.

As for how this works, it is rather simple and the policyholder doesn't have to do anything special. All the policyholder has to do is make sure the premiums are paid and that is it. The rest is done by the insurance company.

How Cash Value Works

He way cash value works is rather simple. First, you pay your premium. The insurance company then takes a portion of this premium and they invest it into an investment of their choice. It is true that you don't get to choose that investment, but the investment is one that works for everyone so that a return can be made.

The returns are small because the investment is relatively low risk. The return comes back in the form of dividends that continue to accumulate over time so that you are able to have an asset. Believe it or not, a whole or universal life insurance policy with cash value is considered an asset. Because of this, you can use it as collateral if you need to. You are given some financial leverage that you didn't have.

But because the returns are small, the money is accumulated slowly. It can take approximately a decade before there is a good usable cash value present. And what is meant by usable is that you can borrow from your policy like you would a loan. The main difference is that it is your money.

Using Your Cash Value

You can take the loan when you need to and pay it back with interest. It is best that you pay it back as soon as possible so that your life insurance policy can always retain the cash value. Upon your death, the death benefit is paid to your beneficiaries in addition to the death benefit.

There are some individuals, however, who want to cash out their policy completely. This is also referred to as turning the policy in. This is where you can take your cash value and retain ownership of it, but you don't have to pay it back. This is what occurs when you permanently close the policy.

When you close out the policy, you are not going to be insured. However, there are some individuals who decide they want to turn in their policies because they have found coverage elsewhere. Perhaps another entity is paying for it. This does happen for some. For others, they simply cash out. If you do this, you need to consider the fact that it leaves you uninsured.

Because it is your money that you earned, you can do whatever you please with it, but it is recommended that all individuals are insured, even children. That is why it is suggested you carefully evaluate your reasons behind turning in your policy and consider other insurance options if you felt the permanent option was too much for you.

Fortunately, with the availability of life insurance quotes, you can find a permanent policy that is right for you so that you can have a rate that you can afford. You want to keep your policy in force for life. This is how you're going to make sure your family is provided for and how you're going to have peace of mind.

ING Transamerica Insurance and Investment Group American General Life Companies Prudential Genworth Financial Services SBLI Life Insurance Company

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