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If you're in need of cash to help cover your bills or pay for an emergency expense, you may be wondering if you can cash out your life insurance policy. Fortunately, you may be able to do so, depending on your policy type. Read on to learn how you can use your cash value to receive funds from life insurance.
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Cash value is a feature that comes with permanent life insurance policies like whole life and universal life insurance. If you have cash value life insurance, you'll pay a portion of your premium toward insuring your life and another portion toward building up the cash value. The cash value is considered an investment and it grows tax deferred, with interest.1
As long as you have a permanent life insurance policy, you may be able to tap into its cash value account. Whole, universal, and variable universal life insurance are all examples of permanent life insurance policies that will cover you for life and allow you to maintain cash value as well as a death benefit.2
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
Get StartedThere are several ways you can use the cash value from your life insurance policy while you're still alive, including:2
Depending on the specifics of your life insurance policy, you may be able to take out a loan against the cash value. Since there is no credit check involved and the repayment terms are flexible, you may find it easier to get a loan from your insurance policy than from a bank, credit union, or online lender. If you cash out life insurance this way, keep in mind that any amount you owe on the loan will be deducted from the death benefit.
You may also be able to withdraw a portion of your policy's cash value. In many cases, you won't owe income tax on any withdrawals you make up to the amount of premiums you've already paid. However, any amount you withdraw that exceeds what you've already paid will likely be taxed.
If you decide to surrender your policy, you withdraw its entire cash value. This will end your coverage, and your beneficiaries will no longer be owed a death benefit when you pass away. In addition, you may have to pay a surrender charge or owe income taxes on part of the cash you receive.
Your cash value can help you out if you need money to help pay your life insurance premiums. You may use it to cover out-of-pocket premium payments. This option might come in handy if you're struggling financially.
Some common benefits and drawbacks of cashing out a life insurance policy include:
You may not have to go through an extensive application process or a long waiting period to collect your money. Life insurance loans can offer quick funding because there is no application or credit check. The cash value in your account usually acts as collateral on the loan, and you can take advantage of it once you've built up enough.
Typically, you can lock in a low interest rate on a cash value loan. Depending on your policy, this may be anywhere from 5% to 8%.3 These interest rates tend to be lower than rates on many credit cards and personal loans.
If you cash out your life insurance policy, you'll lower your cash value or get rid of it altogether. Plus, any loan amount you don't repay will be deducted from the death benefit.
When you pay back a life insurance policy loan, you will face interest charges. In the event you borrow a significant amount and your interest exceeds your cash balance, your policy might lapse, and your insurance company may close it. You could possibly be stuck with a hefty tax bill.
Fortunately, you won't have to pay taxes if you withdraw up to the amount of the total premiums you paid into the policy. However, if you withdraw any gains or dividends on the policy, these amounts may be taxed as ordinary income.4
If you need to borrow funds for short-term needs, like a home improvement project or wedding, it may make sense to cash out your life insurance policy. This is particularly true if you're confident you can pay back the loan and don't mind a smaller death benefit for your beneficiaries.
If cashing out life insurance isn't right for you, here are some alternatives to consider:
Aflac offers whole life insurance that comes with cash value. You can reap the benefits of the cash value component while you’re still living, whether you want to withdraw funds or get a loan. If you're interested in a whole life insurance policy with cash value, get a quote today.
Get Started
Life insurance covers your loved ones if you pass away unexpectedly. Learn how life insurance works, what it covers, and some types of policies available.
Life insurance with cash value lets you withdraw money to cover necessary expenses. Find out how cash value savings work and the types of insurance policies offered, including whole life insurance.
Life insurance covers your loved ones if you pass away unexpectedly. Learn how life insurance works, what it covers, and some types of policies available.
Life insurance with cash value lets you withdraw money to cover necessary expenses. Find out how cash value savings work and the types of insurance policies offered, including whole life insurance.
1 Value Penguin – How Does Cash Value Life Insurance Work? Updated February 17, 2026. https://www.valuepenguin.com/life-insurance/cash-value-life-insurance. Accessed May 14, 2026.
2 Nerdwallet – Can You Cash Out a Life Insurance Policy? Updated May 16, 2025. https://www.nerdwallet.com/article/insurance/getting-cash-from-life-insurance. Accessed May 14, 2026.
3 Investopedia – Borrowing Against Life Insurance: Pros, Cons, and How-Tos. Updated November 02, 2025. https://www.investopedia.com/articles/personal-finance/121914/understanding-life-insurance-loans.asp. Accessed May 14, 2026.
4 Investopedia – Accessing Cash From Your Life Insurance: Pros, Cons, and Tips. Updated October 24, 2025. https://www.investopedia.com/articles/pf/08/life-insurance-cash-in.asp. Accessed May 14, 2026.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent/producer.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Aflac life plans – A68000 series/Term Life: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68200, A68300 & A68400. In New York, Policies NY68200, NY68300 and NY68400. Whole Life: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368100. In Delaware, Policy A68100. In New York, Policy NYR68100. B60000/Term Life: In Arkansas, Oklahoma, Pennsylvania, Texas & Virginia, Policies ICC18B60200, ICC18B60300, & ICC18B60400. Not available in Delaware, Idaho, New York and Oregon. Whole Life: In Arkansas, Oklahoma, Pennsylvania, Texas & Virginia, Policies: ICC18B60C10, ICC18B60100. Not available in Delaware, Idaho, New York and Oregon. Q60000 series/Term Life: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania & Texas, Policy ICC18Q60200M. In Delaware, Policy Q60200M. In New York, Policy: NYQ60200M. Not available in Virginia. Whole Life: In Arkansas, Delaware & Oregon Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In New York, Policy: NYQ60100M. Not available in Virginia.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (NAIC 92908).
In AR, DE, ID, OK and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Not available in NY.
Coverage/plan levels may not be available in all states, including but not limited to NM or VT. Benefits/premium rates may vary based on plan selected. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
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Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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