How Do I Use My Life Insurance?

If you have a life insurance policy, you may wonder if you can use it before your death. There are two main forms of life insurance: term life and permanent life. Permanent life policies can build cash value, while term life insurance does not build cash. Permanent policies are more expensive than term policies because they provide coverage for your entire life and can build cash value.

Type of Policy	Description
Whole life	Guaranteed level premiums and a death benefit that stays the same for the length of the policy. Guaranteed rate of cash value growth.
Universal life	More flexibility with fewer guarantees. Allows you to adjust your premiums up or down within a certain range.

It usually takes a few years for the cash value in a policy to grow to a usable sum. Once it does, you can access the cash value in several ways:

1. Take out a loan against your policy (repaying it is optional).
2. Withdraw some of the funds from your cash value, either in a lump sum or in payments.
3. Surrender the policy altogether (this cancels the policy and the life insurance coverage that comes with it).

Note that borrowing against your policy or withdrawing cash will generally reduce your death benefit. Surrendering the policy altogether can also result in taxes and fees, which can reduce your cash value.

The amount of your cash value depends on the type of policy you own, the amount of insurance you have, and how long you have had the policy. If you don’t have a financial professional to discuss insurance with, Guardian can help you learn more about buying life insurance or even find a nearby financial professional who will listen to your needs and help guide you to a solution.

Remember that this article is for informational purposes only, and Guardian may not offer all the products discussed. Please consult with a financial professional to understand what life insurance products are available for sale.