Surrendering a life insurance policy for its cash value is a decision that should be carefully considered. Whole life insurance policies, like the one your husband has, have a cash surrender value. The cash surrender value is the amount of money you would receive if you cancel the policy and surrender it to the insurance company. The cash value in a whole life policy grows over time, and you can access it by surrendering the policy.
Before making a decision, it's important to understand a few key points:
1.
Tax implications: When you surrender a policy, you may owe taxes on any earnings you receive that exceed the total premiums you paid into the policy(
https://www.guardianlife.com/life-insurance/surrender).
2.
Surrender fees: Most insurance companies charge surrender fees when you claim the cash surrender value of your policy. These fees can vary between plans and may be higher for newer policies(
https://www.bankrate.com/insurance/life-insurance/cash-surrender-value/).
3.
Financial need: Surrendering a life insurance policy should be considered as a last resort for addressing financial difficulties. It's important to explore other options, such as reducing expenses or seeking financial assistance, before surrendering a policy that provides financial security for your loved ones in the event of your husband's passing.
It's recommended to consult with a financial advisor or an insurance specialist who can evaluate your specific situation and provide personalized guidance based on your needs and goals. They can help you weigh the pros and cons of surrendering the policy and explore alternative solutions that may better suit your financial circumstances.