If you have a permanent life insurance policy that has accumulated a significant amount of funds in its cash value, you can use that money while you’re alive to pay premiums, take ꦜout a loan, or withdraw cash permanently. If you withdraw enough, you’ll surrender the policy. You may also be able to recoup the cash value by selling the policy to someone else.  

Your cash value typically does not get passed on to your beneficiaries after you die, so you may want tap into it to 澳洲幸运5开奖号码历史查询:supplement your retirement income, fund a house remodel, or pay for a grandchild’s college tuition.&ജnbsp;

However, it’s important to weigh your options carefully—the way you access your cash value will impact the amount avꦑailable to you, your death benefit, and your account’s growth.

Types of Life Insurance That Build Cash Value

Many life insurance policies contain a cash value component—but not all. 澳洲幸运5开奖号码历史查询:Term policies lack thiꦿs feature, while most permanent policies include it. 

Here’s a look at four popular permanent life insurance types with cash value components: 

• Whole Life: 澳洲幸运5开奖号码历史查询:Whole life comes with fixed premiums, a 澳洲幸运5开奖号码历史查询:fixed death benefit, and a fixed interest rate. It offers predictability but lacks flexibility and limits your cash value’s growth potential. 
• Universal Life (UL): UL lets you adjust your premium and death benefit, within certain limits, throughout your life. However, you have to ensure your policy stays properly funded or it can lapse. With these policies, the cash value grows based on market interest rates. The return can go up and down each year, in contrast to the fixed rate on whole life insurance.
• Indexed Universal Life: 澳洲幸运5开奖号码历史查询:Indexed UL offers the flexible premiums and death benefits of UL policies, but differs in how the cash value growth works. A portion will be put into an account linked to an the performance of an equity index such as NASDAQ or the S&P 500. Your growth depends on the performance of the stock market index, though there is usually a minimum interest rate guaranteed. 
• Variable Universal Life: 澳洲幸运5开奖号码历史查询:Variable UL also comes with flexible premiums and death benefits. Additionally, it lets you invest your cash value into subaccounts similar to 澳洲幸运5开奖号码历史查询:mutual funds. You’ll need to select your investments and manage them. This means more risk, including the possibility of losing cash value, but the potential for higher returns.

The right fit for you will depend on your risk tolerance, investment knowledge, and flexibility preferences.

5 Wa🌊ys to Get Cash From Your Life Insurance Po﷽licy

If you’re thinking about pulling cash out of your life 🅰insurance policy, here are five ways you can do so.

1. Cover Your Policy Premiums

The premiums on permanent life insurance 澳洲幸运5开奖号码历史查询:policies can be expensive, ranging from a couple hundred dollars a month for a healthy 30-year-old paying for a $500,000 whole life polꦕicy, to four times that much for a hea🌃lthy 60-year-old. One potential way to tap into your cash value is to use it to cover your life insurance premiums. 

Once your cash value reaches a certain point, some insurers and policies let you use it to pay for your coverage. This can be helpful if, for example, you retire and need to reduce your monthly expenses but want to keep your policy in place. 

2. Take Out a Loan

Another option is to take out a life insurance loan against your cash value balance. Insurers of🅘ten offer loans once policyhoཧlders have paid a certain amount into the policy. 

Life insurance🌞 loans can 🍨be helpful for those who want a low-cost, flexible way to tap into their cash value while keeping their coverage in place.

To apply, you’ll typically submit a form and verify your identity. No credit or income checks are required because the loan is guaranteed by your policy. You will not owe income tax for taking out cash value with loans, even if you borrow more than what you’ve paid in premiums—as long as you pay it back, ♊either while alive or with the policy death benefit.

While cash value loans come with interest charges, the rates are typically lower than those on home equity or personal loans. Tꦉhe loan terms are also more lenient. You can often borrow up to 90% of your policy’s value and repay it whenever you want. 

However, an outstanding loan could reduce your cash value growth. And if you die before paying off the loan, the outstanding balance will be deducted from the death benefit your beneficiary receives. 

3. Withdraw Funds

Another option is to withdraw funds from your policy. You can withdraw up to the amount 😼you’ve paid without paying any income taxes. However, if you withdraw more than you paid in premiu♔ms, you will owe income tax on any earnings. 

In addition, a withdrawal will typically result in a reduction in your death benefit—sometimes for even more than you’ve taken out, depending on your policy. It will also set back the growth of your cash value account.

4. Surrender Your Policy for Cash

I🤪f you’re okay with ending your policy, you can cancel it and receive a surrender cash value payment. This payment may♛ be a lump sum or it may be paid over time. 

While this can allow you to access a large portion of your cash value, you’ll no longer have life insurance coverage, so your beneficiary won’t receive a death benefit. Further, surrender fee๊s and taxes could reduce the amount you receive.  

If you’re considering this route, contact your insurer to find out what your 澳洲幸运5开奖号码历史查询:surrender value is and what fees apply. The fees are usually higher for newer policies and don’t apply after 10 to 15 years.  

5. Sell Your Policy

You might also be able to sell your policy through a life settlement or 澳洲幸运5开奖号码历史查询:viatical settlement. Both involve selling your life insurance policy to a third party for more than the cash surrender value but less than the death benefit. For example, Harbor Life Settlements says you can get up to 60% of the death benefit, and claims it helps customers get four to 11 times more than their cash surrender values. 

Once a sale is complete, the buyer becomes responsible for paying your insurance premiums and maintenance fees for the rest of your life. Then, when you pass away, they receive the policy’ꦆs death benefit. 

If you want to explore this option, you can sell♔ directly to a company or work with a broker that helps you get the best deal (and charges a commission to your buyer). 

Frequently A༒sked Questions (FAQs) About Accessing Cash Value

The Bottom Line

The best way to access your cash value will depend on your situation. If you’d like to take out cash but leave your polic🗹y and death benefit in place, consider a life insurance loan, a withdrawal, or using the cash to cover your premium payments. On the other hand, if you want to give up coverage and withdraw as much as possible, consider a surrender or a sale.

The ability to access cash value can be very handy for life insurance policyholders, but the consequences are far-reaching. Be sure to consider the costs, tax implications, and impact on your larger financial plan. If you have any doubts or concerns, it can be helpful to 澳洲幸运5开奖号码历史查询:consult a financial advisor.