Withdrawing cash from a life insurance policy is one way in which those who are having financial difficulties can get the money they need. Perhaps you unexpectedly lost your job, want to invest in an investment property or suffered a decrease in your salary and want to use your policy money. Try to get the effective value of a life insurance policy to meet your cash flow needs and desires.
Get money by direct withdrawal from your life insurance policy. Keep in mind that if you decide to withdraw money from your life insurance policy, you may have to take responsibility for the payment of any tax that causes the part of your withdrawal that is greater than the payment of premiums during the term of the policy. For example, if you have $2,000 in cash value as part of your life insurance policy and the total premium payment is $1,000, you could withdraw $ 1,000 or less tax-free. However, if you choose to get more than $ 1,000, you would have to pay taxes for the amount you withdraw.
Get a loan against the life insurance policy. Acquiring a loan would mean not paying taxes at the time of withdrawal. Keep in mind that if there is any interruption in the coverage of the life insurance policy, you will need to raise the money to pay taxes on the portion of the cash value that is greater than the amount of the premium payment.
Submit your life insurance policy. Decide if you want to maintain the protection of the death benefit that is part of your life insurance policy. Terminating this portion of your policy would result in the payment of a fee that is commonly called a delivery fee. Paying this cost will allow you to cancel this benefit. However, paying a delivery fee could cause your cash value to decrease. Again, keep in mind that you also have to pay taxes on the amount of money you receive from your insurance company that is greater than the amount you paid for your premiums.
Warnings
Think about consulting with a lawyer who is an expert in tax matters before withdrawing any money from your insurance.