Before you cash in your whole life policy, you should discuss with your agent / broker to be sure you are aware of any other options and any consequences.
All companies require notification in writing that you wish to surrender your policy. Some accept letters other require surrender forms. Simply contact your agent/broker and indicate that you would like to surrender your policy and you will be advised what is needed.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
That is a great question! Cashing in, or "surrendering" your policy is actually a very simple process, but I'd really ask you to think about it before doing it. The first thing is that you have another policy in force before you cancel this one. The second is that if it is a cash flow issue, that you consider a couple of alternatives - maybe you reduce the coverage amount, and lower the monthly payment; maybe you settle the policy for the amount it will pay out now, and keep the coverage with no more payments due; or perhaps you just borrow out of the policy, and keep the policy active while getting the cash that you need. If you have your heart set on surrendering the policy, contact your agent, have them instruct you on the company's requirements, and tell you the amount to expect. I hope that helps, thanks for asking!
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
To "cash in" a whole life policy? Depends on what you mean specifically. If the insured person has died, contact the insurance agent for the policy or the insurance company. They will have a form for you to fill out, (assuming you're the beneficiary), and you will need to submit a copy of the death certificate.
If you want to access the cash value in the policy without giving up the policy - that is you want to use some of the cash value and remain insured, you simply need to contact the insurance company and tell them you want to borrow against the cash value.
If you want to surrender the policy - that is take all the cash value and give up the policy no longer to be insured, again you need to contact the insurance company and tell them that. They will have a form for you to file with them. Be aware that by surrendering the policy and taking the cash value out you will likely have to pay tax on the income.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
For sure, it is a simple procedure. Call up your insurance company and ask for the right form. There you go.
But: as with any major decision, you should first assemble a team of advisers and make sure all bases are covered the way they should be. You do not want this move to backfire on you.
First of all, talk with the beneficiary of the policy. Once you cash it in, there will be no survivor benefit. Nothing.
Is that OK? Are you self-insuring with some other liquid funds? Will the exact amount of money needed be there when it is needed? All cash needs met? Debts can be paid off? How about money for the future?
Kids will be OK? Grandkids? Your business? Charitable gifts taken care of?
Lots to think about before you wipe out the death benefit.
Then talk with your insurance broker. Talk about the possibility of your getting coverage later, should you need it again. What would the pricing be like?
Of course, you should be given only the most general of answers. You will be older, so the price, of course, would be higher...
... assuming that you are insurable. And your broker should make it clear in no uncertain terms that you may unfortunately not be eligible for coverage at a later point. You may have a serious medical condition. You may take up an adventurous hobby. You may have a job that requires travel to hazardous places. Any number of changes could take place that would disqualify you for coverage, or drive the price up. A lot.
Don’t forget that. Don’t take your insurability for granted. It is not prudent to assume you will be able to easily pick up a cheap policy.
You should also talk with your accountant or tax advisor. Depending on how you have funded your life insurance policy, all or a portion of the surrender value may be taxable. You need to know that before you accept the check. You do not want to get hit with an unexpected tax bill, especially if you have counted on all the money for a specific purpose.
There you go. Surrendering your life insurance is as simple as completing a form. But it really is not so simple.
.JPG){kind=avatar}
All companies require notification in writing that you wish to surrender your policy. Some accept letters other require surrender forms. Simply contact your agent/broker and indicate that you would like to surrender your policy and you will be advised what is needed.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you want to access the cash value in the policy without giving up the policy - that is you want to use some of the cash value and remain insured, you simply need to contact the insurance company and tell them you want to borrow against the cash value.
If you want to surrender the policy - that is take all the cash value and give up the policy no longer to be insured, again you need to contact the insurance company and tell them that. They will have a form for you to file with them. Be aware that by surrendering the policy and taking the cash value out you will likely have to pay tax on the income.
But: as with any major decision, you should first assemble a team of advisers and make sure all bases are covered the way they should be. You do not want this move to backfire on you.
First of all, talk with the beneficiary of the policy. Once you cash it in, there will be no survivor benefit. Nothing.
Is that OK? Are you self-insuring with some other liquid funds? Will the exact amount of money needed be there when it is needed? All cash needs met? Debts can be paid off? How about money for the future?
Kids will be OK? Grandkids? Your business? Charitable gifts taken care of?
Lots to think about before you wipe out the death benefit.
Then talk with your insurance broker. Talk about the possibility of your getting coverage later, should you need it again. What would the pricing be like?
Of course, you should be given only the most general of answers. You will be older, so the price, of course, would be higher...
... assuming that you are insurable. And your broker should make it clear in no uncertain terms that you may unfortunately not be eligible for coverage at a later point. You may have a serious medical condition. You may take up an adventurous hobby. You may have a job that requires travel to hazardous places. Any number of changes could take place that would disqualify you for coverage, or drive the price up. A lot.
Don’t forget that. Don’t take your insurability for granted. It is not prudent to assume you will be able to easily pick up a cheap policy.
You should also talk with your accountant or tax advisor. Depending on how you have funded your life insurance policy, all or a portion of the surrender value may be taxable. You need to know that before you accept the check. You do not want to get hit with an unexpected tax bill, especially if you have counted on all the money for a specific purpose.
There you go. Surrendering your life insurance is as simple as completing a form. But it really is not so simple.