How Does One Access Their Insurance Cash Value?

Accessing your insurance cash is something that is possible with certain life insurance policies. Whole life insurance is one of the most common life insurance policies out there and it builds cash value as you go. The cash value will always be less than you have paid into the policy, therefore accessing it is not always in your best interest. However, if you desperately need the money, there are ways to get your hands on it. Here are a few things to keep in mind when trying to access your insurance cash.

Cash Out

The most easily understood method is the cash out policy. This involves you closing the account out and cancelling your life insurance benefits. You will no longer receive a death benefit from the life insurance company in return for full access to the cash. This is not the ideal way to access your money because you lose the policy and all of the money that you have paid into it over the years.

Life Insurance Policy Loan

The most ideal way to access your cash in times of emergency is through the use of a policy loan. A policy loan allows you to borrow against the cash value of your life insurance policy without surrendering the policy. Using this method allows you to get your hands on the money and you don't have to give up all of the money that you have paid out in premiums over the years. A policy loan is similar to other types of loans that you may take out. You will get the lump sum up front and then you will repay the balance over time.

Policy Loan Advantages

When using a policy loan, you are receiving several advantages that other loans cannot claim. For one thing, you are not subject to normal application procedures. In order to be approved for the loan, you simply fill out a form that is provided by the life insurance company. They will not need to check your credit or do any of the other due diligence that typically come with loans. You receive a check from them quickly and you can even borrow up to 90% of the cash value.

Another advantage of this type of loan is that the interest is almost always less than you could get in the open marketplace. Paying less in interest is a great way to save thousands of dollars over the life of the loan. The interest that you do pay is also easier to pay back, because you are basically paying yourself back.

In addition to low interest, you also receive very flexible repayment terms in most cases. This means that you can basically pay the loan back at your discretion. If you want to make a large payment one month, you are welcome to do so. If you want to skip a month here and there, no one will care. This is definitely the easiest way to access your insurance cash value.

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