How to Verify the Cash Surrender Value of Prudential Life Insurance

Most Prudential life insurance is purchased in order to financially protect loved ones after your death. Life insurance proceeds can be used to pay off funeral expenses, auto and mortgage debts and estate taxes. While this is the primary reason for purchasing life insurance, you can also fund a supplemental savings program where assets grow tax-deferred in the policy's cash value. This is only available through permanent life insurance such as whole or variable life, not term policies.

Instructions

1. Review your policy to determine what type of insurance it is. Remember that only whole and universal life policies accrue cash value.

2. Review whether your cash value is growing based on a fixed rate of return or a variable rate of return. Fixed rates are guaranteed, whereas variable rates fluctuate based on market performance. Your most recent statement should show how your cash value is invested if it is in mutual fund sub-accounts or getting a fixed rate of return.

3. Contact Prudential customer service to determine what the present cash value is. This number includes premiums paid plus any interest earned on the account. If the life insurance policy is a variable policy, this number will fluctuate. Fixed accounts will only grow from this number.

4. Ask your customer service representative if you are still in a surrender period for the insurance policy. Your insurance contract should state how many years you are required to maintain the policy without distributions to be surrender-free. If you liquidate prior to this period, you will pay a surrender fee, generally a percentage of the amount you pull out of the cash value. Subtract the surrender value from the total cash value. For example, if you have $100,000 cash value in a variable life policy with a 7% surrender value, you will subtract $7,000 from $100,000 to get a $93,000 cash surrender value.

5. Verify your numbers with the Prudential customer service representative. Be sure to notate this information with their name and employee identification number.

Tips & Warnings

• Cashing out your life insurance cash value may result in a taxable event. Consult a tax advisor about doing a complete surrender or possibly performing a 1035 Exchange into a new policy if you were unhappy with the old Prudential policy. A 1035 Exchange is a tax-free exchange of insurance policies. Surrender charges may still apply.

References

• Insure: Cash Value in Life insurance