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It's obvious to see how cashing out a life insurance policy early can help you. It may pay off some bills and help you with your current or long-term care needs. Yet, doing so has long-term implications.

If you are investing in life insurance, you are investing in a long-term plan. It works best if you leave it in place for your entire life. During that time, it works to build value. Depending on which type you have, it may have only a fraction of that value right now.

Why Life Insurance Matters

Life insurance provides financial support to your loved ones after you die. It works the best by helping your loved ones can continue the quality of life they have after you are not there. They can often use a life insurance policy to afford many of the excess costs associated with you death. When investing in life insurance, keep this end goal in mind.

Determine What Is Available to You

Some situations that warrant tapping into this source of income before death. For example, in situations where there is a dire financial need, cashing it out can help to cover costs.

However, life insurance may not be the best idea for situations such as investing in a mortgage or paying for your child's education. Use it only as a financial tool for significant financial need.

What Happens When You Cash In

Not all life insurance policies offer a cash-in option. If you fail to make payments on your policy, it becomes inactive. The insurer might then cancel it. You do not get a refund for any investments made.

Some policies have a value that builds over time. When this is the case, the insurer may provide a specific value of the policy to you at the time you wish to cash it in. This is generally a fraction of the true value of the plan.

Cashing in the policy early means there is less time for the value to grow. The insurer often uses your payments as an investment tool. Without long-term consistency, there is little to invest and little to provide as a return. Cashing in early may actually hurt you in the long term. The funds that allow interest payments will be less when cashed in early as well. Talk to your life insurance team before you make this decision. It may not be your only option.

We've got you covered. Call Miller's Insurance Agency, Inc. at (610) 269-4500 for a fast, free Exton life insurance quote.

Posted 8:23 PM

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