Can I Withdraw Money From Life Insurance?

Some forms of life insurance allow you to withdraw cash.

Not only does life insurance provide a benefit when you die, some forms of life insurance can also provide a living benefit. Plans that accumulate cash over time can give you access to needed funds in times of emergency or to pay a large expense.

Cash Value

Permanent life insurance plans such as whole life plans build up cash value over time, as a portion of your premium goes into a cash accumulation fund. Depending on the type of policy, the money earns interest or dividends on a tax-deferred basis until you make withdrawals.

Policy Loan

You can access cash from your policy in the form of a policy loan. The interest rate is typically lower than you would receive from a lending institution.

Considerations

Although you do not need to repay the policy loan, there will be negative implications if you do not. Upon your death, the amount of any outstanding loan balance plus interest will be deducted from the settlement amount, meaning that your heirs will receive a lesser death benefit.

References

• CNNMoney.com: 5 Things to Know About Permanent Life Insurance