What Life Insurance Can You Cash Out?

Understanding whether your life insurance policy has cash value is essential for making the most of your coverage. Here’s how you can find out if your policy includes this benefit

1. Check Your Policy Type

The first step is determining the type of life insurance policy you have. Not all life insurance policies accumulate cash value.

• Permanent Life Insurance: Policies like whole life, universal life, and variable life insurance typically build cash value. These policies have both a death benefit and a savings component that grows over time.
• Term Life Insurance: This type of policy only provides a death benefit and does not accumulate cash value. If you have a term policy, there is no cash value component.
  
  

2. Review Your Policy Documents

Your life insurance policy documents will specify whether it includes a cash value component. Look for sections discussing cash accumulation, savings, or investment features.

If you cannot find the information in the paperwork, check your annual policy statement. This statement should detail your cash value balance if your policy includes it.

3. Contact Your Insurance Provider

One of the easiest ways to know if your policy has cash value is to contact your insurance agent or insurance company. They can provide details about your specific policy, including:

• Whether it has cash value
• How much cash value has accumulated
• Options for accessing or using the cash value
  
  

4. Check Your Premium Payments

In a cash value policy, part of your premiums is allocated to the savings or investment component. If you’re paying higher premiums compared to a typical term life insurance policy, it could indicate that your policy is building cash value.

5. Policy Age and Maturity

Cash value grows over time, so if you’ve had your policy for several years, the cash value will have started to accumulate. Policies generally don’t build much cash value in the first few years, but after 10 or more years, you’ll likely see a substantial balance.

If you’re unsure whether your life insurance policy has a cash value, start by reviewing the type of policy, your documents, and contacting your insurer. Knowing if you have a cash value policy can provide additional financial flexibility through loans, withdrawals, or premium payments.