How to Get Money on Life Insurance

Ways to Get Money from Life Insurance

Life insurance can provide funds during your lifetime through policy loans, withdrawals, or settlements, and after death through beneficiary payouts. The options depend on whether the policy is term or permanent and how long it has been active.

Policy Loans and Withdrawals

Permanent life insurance policies build cash value over time. You can borrow against this cash value or withdraw a portion of it. Loans typically do not require a credit check, but unpaid balances reduce the death benefit. Withdrawals up to the amount you have paid in premiums are generally tax-free.

Viatical and Life Settlements

If you have a terminal or chronic illness, a viatical settlement allows you to sell your policy for a lump sum. A life settlement applies to policies with insureds who are not terminally ill. In both cases, the buyer takes over premium payments and receives the death benefit later.

Accelerated Death Benefits

Some policies include an accelerated death benefit rider. This lets you receive a portion of the death benefit while still alive if you qualify under specific conditions such as a severe illness or need for long-term care.

Claiming the Death Benefit

After the insured passes away, the beneficiary files a claim with the insurance company. The process usually requires a death certificate and proof of ownership. Payouts can be structured as a lump sum or through installments.

Comparing the Options