There are a few different ways you can take a withdrawal from your life insurance policy:
Partial Withdrawals: You can take out a portion of your policy's cash value. This may be subject to surrender charges, which are fees for taking money out of the policy early.
Full Surrender: You can surrender the policy entirely, receiving the entire cash value minus any surrender charges. This will terminate the policy.
Withdrawals from life insurance policies are generally tax-free up to the amount of your basis (the amount you have paid in premiums). Any withdrawals above your basis may be subject to income tax.
When to Consider Withdrawals
Withdrawals can be a useful tool for accessing your policy's cash value. However, it's important to consider the potential drawbacks, such as the impact on your policy's value and the potential for taxes.
If seeking a licensed professional, consider our services. Our insurance advisors and client support team are here to assist you with your insurance needs.
This guide has offered a comprehensive overview of withdrawals in the context of insurance. For those seeking to deepen their understanding, we recommend exploring our guide on Cash Value Life Insurance, which dives into the intricacies of this type of policy and its implications in greater depth.
