FAQ: Can I Withdraw Cash from a Whole Life Insurance Policy?

Posted in Life Insurance , Whole Life Insurance

September 10th, 2009

Whole life insurance is only one of the options available to consumers interested in getting a policy with a death benefit to provide for their family. Whole life insurance is not just a policy that kicks in after you are gone, it is a complicated financial tool many people utilize to plan for retirement, their child’s education or even buying a home.

How Do Withdrawals Work?

When a person opts into a whole life insurance policy, they are choosing a type of insurance that provides a death benefit builds a cash value that can be tapped into like a line of credit. The cash value of a whole life insurance policy accumulates over time with the first couple of years going towards expenses associated with opening a policy. After year two or three, premium payments start making more significant contributions to the overall principal account value and with enough funding, a person will start building value in their policy.You can typically make cash withdrawals from your whole life insurance policy much like a low interest loan.

Cash Value Benefit

Many people choose whole life insurance policies because they will have the ability to tap into the cash value just in case. By making a cash withdrawal from your whole life insurance policy, depending on the policy terms and the amount of value in the policy,the ultimate amount of the death payment may be reduced. When you opt to make a cash withdrawal from your policy you can opt to take either afull or partial amount of the cash value of the investment.

It is strongly advised that you seek the advice of a whole life life insurance professional to further clarify the matter.