When you cancel your Whole Life insurance you are given the option to take the cash value that has accumulated, or to turn your policy into a reduced paid up policy. If you choose the latter, you will not owe any more premiums but will still have some life insurance coverage.
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
I can't imagine why you would want to just cancel your Whole Life insurance policy! You know that you have the option of replacing your current policy with another policy and have all the value of the current policy transferred to the new policy?
However as you asked what happens when you cancel a whole life policy - what happens is you no longer have the insurance. If the policy has grown sufficient cash value to cover the surrender fees and have an excess, you should be able to receive the remaining cash value at the time of cancellation.
You really should talk with a qualified Insurance Adviser and find out what your options are and then decide how to proceed.
There are other options than just cancelling a whole life insurance policy. First when you cancel a whole life insurance policy the cash value of gains is taxable as income. Depending on the tax bracket your in, this could be costly.
The better options would be to stop paying premiums and use the cash value to purchase paid up life insurance. This way you can leave your beneficiary a face amount upon your death without having to pay any premiums in the future.
Another better option would be to take a loan against the cash value and pay a very low interest rate , but not have to pay any taxes.
Before you make a decision please contact your life insurance agent or the life insurance carrier and explore all of your options before just cancelling your whole life insurance policy to avoid a costly mistake.
.JPG){kind=avatar}
However as you asked what happens when you cancel a whole life policy - what happens is you no longer have the insurance. If the policy has grown sufficient cash value to cover the surrender fees and have an excess, you should be able to receive the remaining cash value at the time of cancellation.
You really should talk with a qualified Insurance Adviser and find out what your options are and then decide how to proceed.
The better options would be to stop paying premiums and use the cash value to purchase paid up life insurance. This way you can leave your beneficiary a face amount upon your death without having to pay any premiums in the future.
Another better option would be to take a loan against the cash value and pay a very low interest rate , but not have to pay any taxes.
Before you make a decision please contact your life insurance agent or the life insurance carrier and explore all of your options before just cancelling your whole life insurance policy to avoid a costly mistake.