Tag: cash value

Cashing in a life insurance policy, particularly universal or whole life policies which accrue cash value, can be tempting but requires careful consideration. Before doing so, understand policy limitations, potential tax implications (some proceeds are taxable), and the impact on beneficiaries who rely on the death benefit. Surrender fees, which decrease over time, can also significantly reduce the payout. Alternatives to cashing out include borrowing against the policy’s value, borrowing from other assets like a 401(k) or