How to Surrender a Paid Up Whole Life Insurance Policy

If you're trying to get all your financial affairs in order and find that you have quite a few smaller insurance policies but don't need them all, you might consider cashing in the paid-up whole life insurance policies. Occasionally, it's one place to get money quickly without unnecessary hassle. If you have no other coverage, it's important to take a good look at the value of the insurance before you surrender it. Surrender also has tax ramifications that you don't have if it's paid as a death claim. You can surrender whole life policies if you follow the steps.

Things You'll Need

• Telephone
• Policy numbers
• Forms
• Stamps
• Pen
• Envelope

Instructions

1. Find the company. If the company that issued the policy had a name change, went out of business or merged with another company, you may not find the address listed anywhere. The State Insurance Commissioner's office can help you track down older defunct companies. Even if the company is out of business, most states require that other companies pick up their policies and make the owners whole.

2. Call the company on the phone or write for forms. If you have a telephone number or local office, it's best to speak with someone personally rather than write. You can ask important questions and make sure that you get all the forms necessary. This is especially important if your parents purchased the policy. They may still be the owner and you'd have no right to cash it. If they're deceased, you need to send forms and a death certificate. See if you need an additional form if you lost the policy.

3. Speak to a representative about borrowing from the policy. Sometimes the cash value grows fast enough or dividends are high enough that it simply makes sense to borrow against the policy rather than cash it. You never have to pay back the loan; the company can't refuse to loan the money to the policy owner and dividends often pay the yearly interest, so you still have a policy. Ask for the numbers before you make the decision. Often telephone representatives can send a policy loan without forms if you are the insured and owner of the policy.

4. Fill out the forms. Make sure you fill in the policy number and the sign the form properly. A mistake delays the issuing of a check. Make copies of everything, including the deck sheet of the policy. The deck sheet is the first page that states the policy number, the face amount and the insured.

5. Package up the policy and the forms and mail them to the company. If you can't find the policy, use the lost policy form it sent or check the box that states you lost the policy if there's not a separate form. Mail it to the company or give it to a local agent for surrender.

6. Wait for the check. Larger companies have websites where you track the surrender of your policy. Sometimes, if it takes longer than they tell you, a call to the service center helps to find out what the delay is. If the check is lost in the mail, they won't issue another one for several weeks; that way, they won't stop payment on the check only to have you receive it the next week and attempt to cash it because you thought it was the replacement check.