Life insurance is a wise move to protect your family from financial hardship, but only 52 percent of adults in the United States have coverage from a life insurance provider. The goal is to provide financial support to your loved ones should you pass away before your time. Cash value surrender is one of the most critical aspects to consider with whole life insurance.
The money you’ve saved in your life insurance policy grows as time passes. Should you cancel your life insurance policy, you could be entitled to the cash surrender value from your provider.
Fortunately for your policy, you’ve discovered this helpful guide to understanding the purpose and benefits of cash surrender value. Continue reading to ensure you have the proper coverage your family needs for a bright future today!
What Is Cash Surrender Value?
Cash surrender value is the money you’d receive if you cancel your life insurance policy. Universal and whole life insurance policies protect your entire life. It’s possible to build a cash reserve with your life insurance policy.
The money you earn for your life insurance depends on the premium you’re paying, the interest rate, and the length of your policy. You’ll receive this money if you terminate your policy before passing away.
You’ll need to pay surrender fees and take care of any unpaid premiums before receiving your money. It’s an excellent way to get money when facing financial hardship. Combine cash surrender value with an infinite banking policy to make more of your finances.
Alternatives to Canceling Your Policy
While choosing to cash out your policy might seem right, it’s worth exploring your other options. If you’re seeking cash to help with unexpected emergencies and expenses, consider partially withdrawing from your account. It’s also possible to use a partial withdrawal to pay your premiums.
Selling your life insurance policy is also possible if you no longer need it. You can sell your policy to a third party if you can’t afford your monthly premiums. The buyer becomes the beneficiary and takes over the payments.
Reasons to Surrender
Knowing the right reasons to surrender your policy is also wise for reaching a crossroads with life insurance coverage. Switching from whole life insurance to term life insurance is less complex when surrendering your policy.
Surrendering is also viable if you find a life insurance provider you prefer over your current one. You’ll get the cash surrender value and have that money to purchase a new policy. Remember that you’ll lose your death benefit if you surrender your policy.
Find the Perfect Life Insurance Policy Today
It’s essential to understand cash surrender value when you purchase a whole life insurance policy for you and your family. The cash in your policy grows when you pay your monthly premiums, and canceling your life insurance policy results in a payout of that cash. Consider surrendering your life insurance policy if you find a provider you like more or need emergency cash.
Are you ready to make your money work for you? Explore more of our personal finance content to make the best decisions with your cash!
