How to Cash In Term Life Insurance
Term life insurance is normally pure insurance with no cash value. Some policies, however, have a return of premium benefit. These term insurance policies contain cash value but it's minimal. While the policies end at a specific date, like regular term, in the early years the company collects a higher premium in the early years to offset the increasing cost of the insurance later years plus a little extra money. The interest and "the little extra" pay for your refund of premium. You can cash out these types of term policies.
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Things You'll Need
- Policy number
- Phone number of customer service or insurance representative
- Surrender form
Instructions
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Read your policy to see the percentage of premium you receive back if you terminate the policy early. The company returns a higher percentage of the premium the longer you hold the policy. Each policy varies but all of them offer 100 percent return of premium at the end of the term.
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Call your insurance representative or the customer service line for your company to secure a surrender form. Some companies offer a printable form online.
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Wait for the form to arrive in the mail. Even though it may take only a day or two mail time, it normally takes two days to process your request. Insurance home offices are large and each department has its own job. The person that took your request sends it via Internet to another department where it's processed. The next day it goes out in the mail.
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Fill out the form and send it back with the policy. If you lost the policy, it's not a problem as long as you know the policy number. There's a section on the surrender form to mark if you don't know the location of your policy.
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Mail back the form to the company and wait for a check in the mail. If you had the option of having your check direct deposited to your checking account, use it. It's a faster process since there's several additional departments involved in cutting a check and mailing it. In addition, banks normally put a hold on the funds from an insurance company for an additional five to 10 days.
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Destroy your old policy if you find it. It's no good but if something happened to you, it could cause your beneficiaries undo additional work finding that out that information.
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Tips & Warnings
Don't worry about paying any taxes on the money your receive. Since the money is less than you paid in premiums, it's not taxable.
