Variable life ins policy / surrender value.?

Question

I have a flexible premium variable life insurance policy. I'm trying to figure out what the surrender value is used for. I'm in need to replinish my cash so I was wondering if this is an area I can pull cash from.

Answer 1

You can cash out your insurance policy for the surrender value but you would no longer have any life insurance.

If you insurance policy has a cash value, you can withdraw that amount and your policy remains in effect. It is worth the original the amount you purchased minus the cash value when it comes time for it to be paid out.

Answer 2

There is more to the equation than just simply pulling out the money. While, it is your decision, keep in mind that the investment income on the money in the policy keeps your premiums where they are now.

Any reduction in funds from the policy will have an effect on future premium payments.

My advice: Call the company and ask for an "Inforce Illustration." Also ask for an illustration that projects the impact of your withdraw.

http://www.ohioquotes.com

Answer 3

You bought this from someone, so why aren't you asking them.  Hopefully they are a trusted advisor, so trust them and ask them.

You have many options including reducing the face value, borrowing it out, etc...

http://www.InsurancePickle.com

Answer 4

Ask your agent (or customer service) to run an "in force illustration" with the different scenarios, so you can see how this impacts your policy.  Realize that if you withdrawal more than the cost basis of the policy and the policy lapses, you have a taxable event.

This might be a good source, or there might be a better source for you.  It really sounds like you need a fee-only financial planner.

Answer 5

The surrender value is what you can surrender the policy for.  If you pull out 20k, not only does your cash and surrender values decrease, your death benefit will as well until you either repay the loan or put the money back into the policy.

If you flat out withdraw the money, it may be a taxable event and your cash and surrender values drop.

Point of note, if you loan yourself your 20k and don't pay it back in time, your gracious insurance company will gladly take it from the death benefit as well as interest and fees.  Isn't that nice of them?  Read your policy, this is stated in there.