Co-Founder, Coastal Financial Partners Group, California
It depends on how the policy was designed. A whole life insurance policy matures when it pays out a death benefit on policies that have no stated maturity date. Otherwise, the policy will indicate a maturity date which, on many whole life policies, may be age 95, 98, 100, 120, etc.
The issue with a policy that matures while the insured is still alive is that the maturity benefit will be taxable as the cash is constructively received at that point. Many policies in recent years have maturity extension riders or policy provisions which can extend maturity to prevent such an unwelcome situation so check your policy. Death benefits are normally received income tax-free but a living maturity is income taxable to the extent of gain in the contract to the policy-owner.
If maturity is approaching and such riders are not present, insurers have been known to agree, upon request, to continue the policy extra-contractually. Contact an experienced life insurance professional for assistance.
Life Insurance Policies can mature at the end of coverage as with term life insurance, a limited indemnification product. Term can be extended with a conversation provision in the policy in the case the coverage is necessary beyond the original time period. Maturated dates on permanent policies extend out to age 121 and some use the phrase, “life of the insured.”
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The issue with a policy that matures while the insured is still alive is that the maturity benefit will be taxable as the cash is constructively received at that point. Many policies in recent years have maturity extension riders or policy provisions which can extend maturity to prevent such an unwelcome situation so check your policy. Death benefits are normally received income tax-free but a living maturity is income taxable to the extent of gain in the contract to the policy-owner.
If maturity is approaching and such riders are not present, insurers have been known to agree, upon request, to continue the policy extra-contractually. Contact an experienced life insurance professional for assistance.