If the owner of a life insurance policy dies but the insured is still alive and the policy has not matured, the insured may be able to cash out the policy and receive the cash value. However, the availability of cashing out the policy and the amount the insured will receive depends on the type of policy and the terms and conditions of the specific insurance company.
Permanent life insurance policies, such as whole life insurance,
accumulate a cash value over time. The insured can
withdraw part of the cash value, take out a loan against the balance, use it to pay premiums, spend it to buy additional insurance coverage, or terminate the entire policy to take out its entire cash surrender value(
https://www.investopedia.com/ask/answers/050615/what-difference-between-death-benefit-and-cash-value-insurance-policy.asp).
On the other hand,
term life insurance policies do not have a cash value. They only provide a death benefit if the insured passes away during the term of the policy. Therefore, if the insured is still alive and the policy has not matured, there is no cash value to be cashed out(
https://www.investopedia.com/ask/answers/050615/what-difference-between-death-benefit-and-cash-value-insurance-policy.asp).
It's important to note that if the insured chooses to cash out a permanent life insurance policy, the cash value that is paid out may be subject to taxes and surrender charges, especially if the policy is surrendered during the first few years(
https://www.dfs.ny.gov/consumers/life_insurance/types_of_policies). Additionally, cashing out a policy may reduce or eliminate the death benefit that would be paid out to beneficiaries upon the insured's death(
https://www.investopedia.com/ask/answers/050615/what-difference-between-death-benefit-and-cash-value-insurance-policy.asp).
To determine the specific options and requirements for cashing out a life insurance policy, it is recommended to contact the insurance company directly and consult with a licensed insurance professional who can provide personalized guidance based on the individual policy and circumstances.