Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 17, 2021

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The Truth in a Nutshell

  • Life insurance companies that allow you to cash out will offer whole or universal life insurance policies
  • Cashing out a life insurance policy could come with a penalty and could be taxable
  • It’s usually better to borrow or withdraw from a life insurance policy before you cash it out entirely

If you have a life insurance policy with cash value you’d like to access, the good news is that there are insurance companies that allow you to cash out.

How does life insurance work when you cash out? If you’re confused about how to cash out a life insurance policy, we can help. We’ll help you learn how cashing out life insurance works. You’ll also find out what type of policy has cash value.

Keep scrolling to learn more about life insurance companies that allow you to cash out or enter your ZIP code to get free quotes from top life insurance companies near you.

What are some life insurance companies that allow you to cash out?

Life insurance policies can get a little confusing. Most people are familiar with term life insurance. However, they don’t realize there are many other policy types.

With most term life insurance policies, you’ll pay a monthly premium for a certain period of time. This period is typically 10 to 30 years. However, with some companies, you won’t get a dime back if you outlive the policy.

That means you could pay thousands of dollars for virtually no reason. As a result, some people prefer life insurance policies that build cash value. Permanent life insurance policies usually include cash value, and last for as long as you pay the bill.

Make sure you understand how permanent life insurance works if you aren’t familiar.

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Does my life insurance have cash value?

If you’re searching for a new policy and want it to build cash value, you’ll want to choose a whole or universal life insurance policy.

There are many different versions of these policies, such as an indexed universal life insurance policy. However, all of these versions offer cash value benefits.

With these policies, a portion of your monthly bill is attributed to your cash value. Then this cash value can be withdrawn or used for emergencies.

Life insurance with a cash-out option can help cover unexpected expenses like medical bills, missed work, or other unfortunate life events.

What do I need to know about cashing out life insurance?

First things first, before you worry about how to cash out a life insurance policy, make sure your policy allows you to do so.

Can you cash out a term life insurance policy? Unfortunately not, and many people have this type of policy.

That said, there is a way to get cash out of your life insurance through living benefits. This requires a special life insurance rider, which also costs more each month.

If you have a whole or universal life insurance policy, you can most likely cash out your policy. Just be aware of your company’s rules around this. For example, you can cash out a life insurance policy before death. However, it might come at an expense.

What are the options for cashing out life insurance?

You have a few options if you want to cash in life insurance while still alive. 

First, you can surrender your life insurance policy for cash value. When you surrender your policy, your insurance company will usually deduct a penalty fee. Unfortunately, you may also be required to pay taxes on the amount returned.

Other options for you to cash out life insurance include withdrawals, borrowing, and covering premiums.

In short, these aren’t a total surrender of the policy. Instead, you would be taking a small amount of the overall cash value. This will be enough to cover an unexpected or unpayable expense, including the policy premium.

Should you cash out your life insurance? In most cases, it’s not a great idea to cash out a life insurance policy. That’s because you most likely won’t get all of your money back. Moreover, your beneficiaries will no longer be supplied with a death benefit.

In emergencies or rare situations, it might make sense to cash out a policy. For example, if you outlived all of your beneficiaries, it might make sense to surrender the policy and use your money for personal needs instead.

When learning how to cash out a life insurance policy, you’ll want to speak with your life insurance provider for instructions.

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Which life insurance companies are the best for cash value?

Most of our top 10 insurance companies are solid options for permanent life insurance policies. Of the top 10, the following offer life insurance policies with cash value:

  • State Farm
  • Liberty Mutual
  • Progressive
  • Allstate
  • Chubb
  • USAA
  • Farmers
  • Nationwide

Each of these companies has reliable life insurance options and strong financial strength ratings. Of these, State Farm and Nationwide rank amongst the best for customer satisfaction, according to J.D. Power.

If you’re looking for the best life insurance companies that allow you to cash out, it would be wise to get quotes from both companies.

The Truth About Life Insurance Companies That Allow You to Cash Out

There aren’t many life insurance companies that don’t allow you to cash out as long as they offer permanent life insurance. Just remember, cashing out a life insurance policy usually comes at a hefty price.

We hope you enjoyed learning about life insurance companies that allow you to cash out. Before you go, enter your ZIP code to get free quotes from top insurers in minutes.