How to Get Money From Whole Life Insurance

Whole life insurance is a form of permanent insurance that has a guaranteed cash value. The cash value starts small but increases each year, and many whole life policies also pay policy dividends that increase the cash value beyond the guarantees in the contract.
The cash value in whole life contracts can be accessed via policy loans or by surrendering portions of coverage. In most cases, you can access the funds tax free.
Accessing the funds in a whole life policy reduces the death benefit of the contract, so it is important to understand the decision before proceeding.

Difficulty: Moderate

Instructions

Things You'll Need:

• Whole life insurance policy with adequate cash value

1. Contact the home office of the insurer to ask for an in-force illustration, which will show you the policy's current status. It will show premiums paid, cash value available, current death benefit and total paid-up insurance. (Paid-up insurance is segments of permanent coverage on which no further premium is due.)
   Most insurers will get you this illustration within a week or two of your request and send it via postal mail.

2. Once you understand the current values of your contract, you can make an informed decision about the best way to access the cash in the contract.
   If your policy has a large amount of paid-up insurance, surrendering portions of the cash value is the most efficient way to access the cash value. If your policy does not have significant paid-up coverage but there is a large cash value, a loan is probably more suitable. If you are unsure of which option to choose, contact an insurance professional, a financial adviser or the home office of the insurer to ask for advice.

3. Once you decide between surrendering portions of coverage and taking a loan against the policy, contact the insurer again. You will need to ask the customer service department for the appropriate paperwork to complete the loan or surrender request.
   You also should ask for a new illustration that shows the values after the loan or surrender. Be sure to look the illustration over carefully. Look at the coverage the policy will provide several years into the future to be sure that accessing the cash today will not reduce the amount of coverage below adequate levels in the future.

Tips & Warnings

• Always consult your insurance professional before accessing cash values in your insurance contracts. You also should consider discussing this decision with your financial adviser.

References

• Insure.com: Cash Value Insurance