Can You Cash Out a Million-Dollar Life Insurance Policy?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Types of Life Insurance Policies

Term Life Insurance:

  • No Cash-Out Option: Term life insurance does not offer a cash-out option. It provides coverage for a specific period, and if the policyholder survives the term, the policy expires without any payout.

Permanent Life Insurance:

  • Cash-Out Option Available: Permanent life insurance includes a cash value component, such as whole or universal life, which includes a cash value component.
  • Considerations Before Cashing Out:
    • Penalty-Free Withdrawals: Some policies allow you to withdraw a portion of the cash value without penalties.
    • Loans: You can take loans against the cash value, which may be tax-free.
    • Living Benefits: Some policies offer living benefits, which allow early access to funds in specific circumstances.
    • Selling the Policy: Known as a life settlement, selling your policy might provide more value than surrendering it.

Benefits of Alternative Options

  • Maintaining Coverage: Loans or withdrawals can provide funds while maintaining insurance coverage.
  • Tax Advantages: Certain withdrawals and loans might offer tax benefits.
  • Higher Value: Selling the policy could yield more money than simply cashing it out.

When to Consider Cashing Out

  • Financial Necessity: If immediate cash is required and other assets are unavailable.
  • Policy Costs: If the policy’s premiums become unaffordable.
  • Change in Needs: If your beneficiaries no longer need the death benefit.


Cashing out a million-dollar life insurance policy is possible with permanent life insurance but not term life insurance. Exploring options like penalty-free withdrawals, loans, living benefits, or selling the policy can often provide better financial benefits. These choices should be weighed carefully to understand their impact on your financial situation and insurance coverage. Contact us today for a free quote.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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