Whole-life insurance can be more expensive than term-life insurance. However, this whole-life insurance policy have the advantage of increasing cash value over time. If you can’t afford or don’t need life insurance, then we are to help you explore ways to cash out your life insurance policy.
In general, limited amounts of cash can be withdrawn from a whole life insurance policy. The available amount varies according to the type of policy you own and the company that issued it. The main advantage of withdrawals of cash – value is that they are not taxable according to your policy basis, provided that your policy is not classified as a modified endowment contract (MEC).
However, withdrawals of cash – value can have unforeseen or unrealized concerns:
Withdrawals which decrease your present value could reduce your death benefit – a possible source of funds for earnings suitable replacement, business or wealth preservation may be needed by you or your family.
If your policy is classified as a MEC, withdrawals are generally taxed in accordance with the rules applicable to annuities – cash disbursements are first considered to be paid from interest and are subject to income tax and, if you are under the age of 59.5 at the time of withdrawal, an early withdrawal penalty of 10 per cent.
Withdrawals are considered taxable in so far as they exceed your policy basis. But sometimes they are non-taxable too.
Withdrawals that reduce the value of your cash surrender may increase your premiums to maintain the same death benefit; otherwise the policy may lapse.
In each and every scenario you are thinking to go through we will provide you with professional advice and constant help until you are satisfied with your final decisions.