Cash Out Life Insurance Policy: What You Need to Know

Life doesn’t always go according to plan—and your life insurance policy should be flexible enough to support your needs when circumstances change. If you no longer need your policy or would rather use the funds now, you may be wondering: Can I Cash Out a Life Insurance Policy? The answer is yes—but how you do it depends on your policy type and financial goals.

In this guide, we’ll walk you through how to cash out a life insurance policy, your available options, and how to get the most value if you choose to sell it.

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How Can You Cash Out a Life Insurance Policy?

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Can You Cash Out a Life Insurance Policy?

Yes, you can cash out a life insurance policy—but it’s important to understand what that means. Depending on the type of policy you own, there are different ways to access its value:

1. Surrender for Cash Value

If you have a whole life or universal life policy, it may have built up cash value over time. You can cash out the policy by surrendering it to the insurance company in exchange for that value. However, surrendering the policy ends your coverage permanently—and the payout is often lower than other options.

2. Take a Policy Loan

Some permanent life insurance policies allow you to borrow against the cash value while keeping the policy in force. This can be useful if you only need temporary liquidity, but unpaid loans reduce your death benefit and may incur interest.

3. Life Settlement: Sell Your Policy for More Than the Cash Value

If your policy qualifies, you could sell your life insurance policy in a life settlement—typically for 4 to 10 times more than the cash surrender value. This option is especially useful if:

  • You no longer need the coverage

  • Premiums are becoming unaffordable

  • You’d rather use the funds for retirement, debt, or medical expenses

There are several methods to get cash from a life insurance policy, depending on your financial needs and long-term goals.

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1. Surrendering the Policy

This involves canceling your life insurance policy and receiving its cash surrender value, if any.

Pros:

  • Simple and fast process.
  • Immediate access to available cash.
  • No repayment is required.

Cons:

  • Cash value is typically much lower than the policy’s death benefit or potential life settlement value.
  • The policy ends, and beneficiaries no longer receive a payout.
  • The amount received may be taxable if it exceeds the total premiums paid.
Age and Health Parameters

2. Taking a Policy Loan or Withdrawal

You borrow against the policy’s cash value or withdraw part of it while keeping the policy active.

Pros:

  • You maintain the policy’s death benefit (depending on the amount borrowed or withdrawn).
  • No credit check is required.
  • Loans are generally tax-free if repaid.

Cons:

  • Unpaid loans reduce the eventual death benefit.
  • Interest accumulates on borrowed amounts.
  • There’s a risk the policy could lapse if the loan balance grows too large or if the cash value decreases significantly.

3. Selling the Policy (Life Settlement or Viatical Settlement)

You sell your policy to a third party for a lump-sum payment. The buyer takes over premium payments and becomes the new beneficiary.

Pros:

  • Payout is typically much higher than the policy’s surrender value.

  • You are no longer responsible for future premium payments.

  • Unlocks financial value from a policy that may no longer be needed or affordable.

Cons:

  • You give up the death benefit entirely.

  • The buyer becomes the new beneficiary of the policy.

  • You must meet eligibility criteria based on age, health, and policy size.

  • The proceeds may impact your eligibility for certain government benefits such as Medicaid.

How the Life Settlement Process Works: Step-by-Step

Selling your life insurance policy through a life settlement can be a smart way to unlock hidden value. Here’s how the process typically works—from start to finish—in a clear and easy-to-understand format.

1. Policy Review

The first step is determining whether your policy is eligible.

  • Most qualifying policies have a face value of $100,000 or more.
  • The insured is usually age 65 or older, or has a serious health condition.
  • Policies can include universal life, whole life, and convertible term life insurance.

2. Valuation

Once eligibility is confirmed, you’ll receive a free policy evaluation.
This gives you an estimate of your policy’s market value based on factors like your age, health, and the cost of premiums.
Summit Life Settlements provides a Life Settlement Calculator to give you an instant estimate.

3. Marketplace Offers

If your policy qualifies, Summit submits it to a network of licensed life settlement providers.
These are companies who buy life insurance policies as long-term investments.
Because Summit is a broker, we create a competitive, auction-style bidding process—so multiple buyers compete to give you the highest possible offer.

4. Sale & Payout

Once you accept the best offer:

  • You sign legal documents to transfer ownership of the policy.

  • The buyer becomes responsible for paying all future premiums.

  • You receive a lump-sum cash payout, often significantly more than the surrender value.

  • The buyer eventually collects the death benefit when the insured passes.

This process is secure, regulated, and confidential, and Summit guides you every step of the way. It’s an excellent option for seniors or those whose financial needs have changed—helping you turn a burdensome policy into meaningful cash.

The Summit Life Settlements Advantage

Why Work with Summit Life Settlements?

If you’re exploring whether you can cash out your life insurance policy, it’s essential to have a knowledgeable, trustworthy expert by your side that can guide you through the Life Settlement Market. At Summit Life Settlements, we specialize in helping individuals like you unlock the hidden value of your life insurance by turning it into a meaningful cash asset—especially when the policy is no longer needed, wanted, or affordable.

As a nationally licensed life settlement broker, we act solely on behalf of you—the policyholder—not the buyer. That distinction matters. While life settlement providers represent the investors who purchase policies, Summit is committed to protecting your best interests and ensuring you receive the highest possible offer for your policy.

Our approach is designed to be safe, transparent, and financially beneficial. We guide you through every step of the process, from initial review to final payout, and present your case to a wide network of licensed institutional buyers. This competitive bidding environment maximizes your policy’s value—and gives you confidence that you’re making the most of your decision.

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What Makes Summit Different?

🔹 Auction-Style Marketplace
We present your policy to multiple licensed institutional buyers in a live bidding environment. This real-time competition drives up the price, so you get the best possible offer—not just the first one.

🔹 You Stay in Control
As your broker, we never pressure you to accept an offer. Instead, we provide clear, objective information so you can make the best decision based on your goals.

🔹 We Handle Everything
From paperwork and compliance to communication with buyers, we manage the entire process. That means less stress for you and a faster path to cash.

Get Started Today

Still asking yourself:
Can I cash out my life insurance policy?
Can you cash out a life insurance policy before death?
We’re here to help you answer those questions with confidence.

✔ Use our Life Settlement Calculator to estimate your policy’s value
✔ Talk to a licensed expert at Summit for free, no-pressure advice
✔ Explore your options and decide what’s best for your financial future

Whether you’re planning for retirement, facing unexpected expenses, or simply reassessing your financial strategy, Summit Life Settlements can help you unlock the hidden value in your policy—on your terms.

Yes, depending on the type of policy you have. Whole life and universal life policies typically accumulate cash value over time that you may be able to access. If you have a term life policy, cashing out usually requires converting it to a permanent policy or selling it through a life settlement.

A life settlement is the sale of a life insurance policy to a third party for a cash payment greater than the surrender value, but less than the death benefit. The buyer takes over premium payments and collects the death benefit when the insured passes away.

  • You are age 65 or older (or younger with a serious health condition)

  • You own a life insurance policy with a death benefit of $100,000 or more

  • The policy is no longer needed, wanted, or affordable

It can be. The taxable portion depends on the method used and your individual circumstances. For example, a portion of a life settlement may be taxable. It’s best to consult a tax advisor or your broker to understand the potential implications

You can’t directly cash out a term policy, as it doesn’t build cash value. However, if the policy is convertible, you may be able to convert it into a permanent policy and then sell it in a life settlement for a lump sum.

No. At Summit Life Settlements, we offer free, no-obligation policy evaluations. You’ll receive a confidential estimate of your policy’s value without any cost or commitment.

Yes. You don’t have to pass away for your life insurance policy to provide financial benefit. Options like surrendering the policy for cash value, borrowing against it, or selling it in a life or viatical settlement allow you to access funds while you’re still living.

Yes, Summit leverages advanced technology for secure online transactions. Our streamlined process expedites the sale, providing a swift and hassle-free experience.

  • Surrendering means canceling the policy and receiving the cash surrender value, which is usually lower.

  • Selling your policy through a life settlement often results in a higher payout, because buyers compete to offer you the best price.

The timeline does vary due to factors out of our control such as the insurer’s response to requested documents, however our technology-driven approach allows us to cut the broker processing time ensuring the process is complete in weeks rather than months.

Summit prioritizes using a technology-driven approach to facilitate the life settlement process. Using our Summit Marketplace along with our expert guidance enables a transparent and streamlined experience ensuring our commitment to maximizing value for our customers.

  • You no longer need the coverage

  • You can’t afford the premiums

  • You need funds for retirement, debt, or medical expenses

  • Your beneficiaries are no longer financially dependent