How to Cash in a Whole Life Insurace Policy
- 1). Review your life insurance needs with your agent and decide how those needs will be met if the policy is surrendered. If the death benefit is essential, consider a policy loan as a means of obtaining cash, while retaining protection. If the insured dies while the loan is in force, the outstanding balance, plus unpaid interest, will be deducted from the death proceeds.
- 2). Request a policy surrender quote through your insurance agent or directly from the company. The quote should include the net amount to be paid from the policy and a statement of the transaction's anticipated tax impact. The IRS treats the gain or profit from a surrendered policy as ordinary income, which has been taxed at levels approaching 40 percent in recent years.
- 3). Gather all the information the company requires be returned with the surrender application, which usually includes the actual physical policy and the signatures of all listed owners.
- 4). Contact your insurance agent to obtain the appropriate surrender documents. As an alternative, download them directly from the company's website. Verify with the company that you are in possession of the correct documentation prior to completion and final submission.
- 5). Return the completed information to the company for processing, as directed, and retain copies for your records. Allow 5 to 10 business days for receipt of the check. If delays arise, contact your agent or the company's customer service department for assistance.
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