The answer is maybe. Cashing out a life Insurance policy before your death will be determined by the type of life insurance policy you have. Cashing out a life insurance policy before death is possible, however, financial advisors agree that this is not the best option for those wanting or needing cash.

  • many term life insurance policies cannot be cashed out because it does not build up any cash value before death
  • some term policies have an option that enables the insured to convert the policy into a form of permanent life insurance. Some of these types of policies are called convertible term life insurance. You may find you have option to add an optional rider for an additional cost
  • whole, variable, universal life policies that accumulate cash value may allow the policyholder to access some of that money while they’re still alive through loans, withdrawals or surrendering
  • review your policy details to determine if cashing out is possible

When you take cash value from life insurance policy, you also reduce the death benefit that your beneficiaries will receive. The cash value is the portion of your premiums that the insurance company has set aside to grow over time. You can access this money through policy loans or by surrendering the policy.

It is recommended to review the pros and cons of cashing out a life policy. You should consider:-

  • the amount of funds you will receive by surrendering, cashing out, or a loan
  • potential taxes you may owe
  • are there any fees and penalties for cashing out?

Cashing out a life insurance policy is different than a life settlement or viatical settlement.

Consider selling your life insurance policy for a cash life settlement.