Cash Value
If you have had your whole life policy long enough to have accrued cash value, yes, you can cash it in.
But, it might be wiser to borrow against it instead or look into other options.
Cashing it in means you are cancelling the policy. If this is your only life insurance policy, it means you no longer have life insurance coverage.
Whole Life and Cash Value
Although there are different kinds of whole life, they all accrue a cash value. This makes them different from term insurance.
The cash value of whole life is cash you can potentially access while you are still alive. You do not need to kick the bucket to access this value. With a term policy, it only pays anything upon the demise of the insured.
However, it does take some time to accrue …show more content…
And, yes, you can potentially cash it out.
If you get into a pickle financially, this cash value can look very tempting. You can think "This is the answer to my problems!"
The Reason People Get Whole Life
But, cashing in your whole life policy is basically the same thing as cancelling the policy. This potentially leaves your loved ones without the financial protection you wanted for them when you chose to get the policy.
If the cash value is substantially less than the coverage value of the policy, this may a bad trade, so to speak. You may be throwing away guaranteed funds that your loved ones will need later for short term gain.
After all, the primary purpose of whole life is to make sure you stay covered. That is the main reason it gets chosen over term life.
Term coverage is typically less expensive, but does not stay in force for your whole life. It ends when the term of coverage ends. The fact that whole life stays in force your whole life is where the name of it comes …show more content…
You will need to stay on top of how much you owe and some other details. The interest rate is typically pretty low.
You should learn more about borrowing against the cash value before you do so, but it is usually going to be a better answer than outright cashing in the policy. It will let you access the cash value while keeping the policy so you still have coverage.
Other Options
If borrowing does not make sense, there may be other options that do make sense. For example, you may want to trade the policy for a long term care policy.
This may make sense if you are in the draw down phase. In other words, if you are seriously ill and going through all your assets due to serious health problems, you may be expecting to apply for Medicaid in the near future. In such circumstances, turning your whole life policy into a long term care policy may be the best decision.
You may also be able to trade it for an annuity or sell it to a life settlement company. Do your research and find out all possible options before you decide to simply cash it in. Once you cash it in, it is gone. That is not the time to find out there was some other option that would have made more sense for you and your loved
But, it might be wiser to borrow against it instead or look into other options.
Cashing it in means you are cancelling the policy. If this is your only life insurance policy, it means you no longer have life insurance coverage.
Whole Life and Cash Value
Although there are different kinds of whole life, they all accrue a cash value. This makes them different from term insurance.
The cash value of whole life is cash you can potentially access while you are still alive. You do not need to kick the bucket to access this value. With a term policy, it only pays anything upon the demise of the insured.
However, it does take some time to accrue …show more content…
And, yes, you can potentially cash it out.
If you get into a pickle financially, this cash value can look very tempting. You can think "This is the answer to my problems!"
The Reason People Get Whole Life
But, cashing in your whole life policy is basically the same thing as cancelling the policy. This potentially leaves your loved ones without the financial protection you wanted for them when you chose to get the policy.
If the cash value is substantially less than the coverage value of the policy, this may a bad trade, so to speak. You may be throwing away guaranteed funds that your loved ones will need later for short term gain.
After all, the primary purpose of whole life is to make sure you stay covered. That is the main reason it gets chosen over term life.
Term coverage is typically less expensive, but does not stay in force for your whole life. It ends when the term of coverage ends. The fact that whole life stays in force your whole life is where the name of it comes …show more content…
You will need to stay on top of how much you owe and some other details. The interest rate is typically pretty low.
You should learn more about borrowing against the cash value before you do so, but it is usually going to be a better answer than outright cashing in the policy. It will let you access the cash value while keeping the policy so you still have coverage.
Other Options
If borrowing does not make sense, there may be other options that do make sense. For example, you may want to trade the policy for a long term care policy.
This may make sense if you are in the draw down phase. In other words, if you are seriously ill and going through all your assets due to serious health problems, you may be expecting to apply for Medicaid in the near future. In such circumstances, turning your whole life policy into a long term care policy may be the best decision.
You may also be able to trade it for an annuity or sell it to a life settlement company. Do your research and find out all possible options before you decide to simply cash it in. Once you cash it in, it is gone. That is not the time to find out there was some other option that would have made more sense for you and your loved