Life insurance comes in two forms, that is, term life insurance and permanent life insurance. Term life insurance is an affordable option as compared to permanent life insurance. Term policies pay out benefits once the insurer passes away during the insurance term. Permanent life insurance is costly, but it does have an investment element to it, which means that it allows insurance plans to build up cash value as time goes by.
If you have permanent life insurance and you want to tap into the cash value of the policy then you can do it these three ways:
Loans: Many life insurance companies allow people to take a loan from the accumulated cash value of their policy for any genuine reason. These loans don’t have any repayment schedule like other loans. These loans will collect interest charges that will directly affect your death benefit. This means that your death benefit amount will be less than what you were supposed to get initially.
Withdrawals: This is a favored way of cashing in your premium; you can withdraw money from your cash value amount without worrying about the interest that you will be charged. You need to remember that the withdrawal may lead to a change in policy premiums and it can affect the life insurance benefits as well.
Surrender: Surrendering a policy means that you are willing to cancel it. Once you cancel the insurance policy, it will release the cash value to the policyholder. Before you decide to surrender the policy, you need to be sure that this is your final decision.
Tapping into the cash value account to obtain the required amount of money, maybe the most natural way of gaining cash from your life insurance. This method doesn’t work for term life insurance policies because they don’t have the cash value element.
The idea of settling your life insurance, when you no longer need it for a certain amount of money, is not a bad idea. They can be a great way of cashing your plan to a third-party investor for cash. If you don’t want to pay the premiums anymore and don’t want the benefits from the insurance policy, then selling it is your best bet. Although the amount that you will get will be less than the death benefits that would have supported your family if you had passed away during the insurance term.
It is always recommended that life insurance settlement companies should be consulted when you decide on selling your insurance policy. A good agency will help you settle your insurance by finding you an ideal buyer and also guaranteeing that you get a reasonable price on selling your insurance. They walk you through the process and make sure that it is done safely and comfortably. So, if you’re in dire need of money and are hesitating at taking loans, then look no further sell the insurance plan and cash in your term life policy.