1. 10968 POINTS
    Tim Wilhoit
    Owner, Your Friend 4 Life, Brentwood TN
    You have a few options when cancelling a universal life insurance policy. First, you can use the cash value to purchase a paid up death benefit so you will have a life benefit to your beneficiary at your death. Second, you can cancel the death benefit and take the cash value which the growth is subject to tax on the gains. Last you can borrow some of the cash value tax free and keep the death benefit intact. I suggest speaking to your trusted advisor or insurance company to get the specifics of your options before making this decision.
    Answered on November 15, 2014
  2. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! There are a couple of ways this could go. By surrendering it, you will have no more insurance coverage, so you first want to consider having another policy in force before doing away with this one. Secondly, if it has any kind of cash value over what you've paid into it, that growth amount is taxable. If you are considering the surrender to take the cash out of it, then you want to consider the tax implications.If it's sizable, you may end up in a higher tax bracket for the year, as well as giving away a sizable portion back to Uncle Sam. Perhaps a loan from it, and keeping the coverage would make more sense. If you're surrendering because it is tanking, and will soon cost you more than you're willing to spend on it, then your main issue will then be the loss of coverage. Check with your adviser to see how the surrender of the policy will affect you, before acting, okay? Thanks for asking!
    Answered on November 15, 2014
  3. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    The procedure for surrendering a universal life policy is similar to surrendering a whole life policy in that both policies have cash value. There is a table of non-forfeiture provisions that should be inside your policy. These will tell you how much guaranteed paid-up insurance you could have, or how long a term policy would remain in force. Additionally it will give you the amount of money available if you decide to surrender the policy.
    Answered on February 5, 2015
  4. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    One last addition to the answers above. If you have borrowed against your universal life insurance policy and did not repay the loan out of your own pocket, you may have tax implications on the remaining loan amount and interest charges. Contact your agent pr the carrier to help you keep up with your policy's performance, if your agent is negligent in keeping up with you.
    Answered on May 12, 2015
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