How to Cash in a Whole Life Insurance Policy
- 1). Investigate the possibility of keeping the policy but using the cash. You don't have to cash in a whole life insurance policy to get the benefit of the cash. Check to see how much it's growing each year before you cash it. Some life insurance with dividends actually provides enough money to keep a small amount of death benefit in force, allow you to use the cash through borrowing and then pay the premium and the interest on the loan. If you simply need the money, this is the best method. You never have to pay the loan off while you're alive, but it is subtracted from the death benefit when you die.
- 2). Consider the tax implications before you surrender your policy. If your cash value is more than you paid in premiums, you'll have a taxable incidence. Again, if you simply borrow the money, you don't pay taxes. If you decide to borrow against the policy, you'll need to call your agent or get a form from the home office either online or by phone.
- 3). Proceed with your plan to cash in the policy if you're certain that it makes sense. Sometimes, the most practical thing to do is cash in the policy. You'll need to contact either a local agent or the home office via the Internet or phone to secure a surrender form.
- 4). Ask for a lost policy form while you're on the phone. If you can't find the original policy, something you'll need to cash in your whole life policy, then a lost policy form is the alternative. This is nothing more than a form stating that you don't know where the policy is and and that you swear to it.
- 5). Fill out the form. If you have a local office, you simply drop off the policy and the form there. Otherwise, you'll need to mail it to the home office customer service department. Don't worry about insuring the policy or getting a return receipt. Even if it's lost in the mail, you can always get "a lost policy form."
- 6). Wait for 30 days before you get concerned. If you don't have a check within 30 days of sending the policy, you need to call. This gives the processing ample time and allows for a few delays. When you call, note the date you sent the policy and the form. Take down the name of the person you talk to on the phone. You may need this information later. If there's no record of receipt at the office, request a new surrender form and lost policy form.
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