Can I Withdraw Money From My Life Insurance?
Yes, you can withdraw money from your life insurance policy, but the ability to do so depends on the type of policy you have:
- Permanent Life Insurance:
- This includes whole life, universal life, and variable life insurance policies.
- These policies have a cash value component that grows over time.
- You can withdraw money from the cash value or take a loan against it.
- Withdrawals may be tax-free up to the amount of premiums paid.
- Excess withdrawals could reduce the death benefit.
- Term Life Insurance:
Understanding Life Insurance Withdrawals
- Withdrawal Limits: Check how much you can withdraw without affecting the death benefit.
- Tax Implications: Understand potential taxes on earnings above the premiums paid.
- Interest Rates: Loans against permanent policies may have interest rates.
- Policy Lapse Risk: Excessive borrowing or withdrawals can lead to policy lapse.
Understanding your life insurance policy’s terms is crucial when considering withdrawals. Permanent life insurance policies offer flexibility for withdrawals or loans, while term life insurance typically does not. Be aware of the impact on death benefits and potential tax implications.
Contact us today for a free quote.
Need Help Buying Life Insurance?
Get help from a licensed financial professional. This service is free of charge.