---
title: Can I cash out my life insurance policy | Coverfolk
url: https://coverfolk.com/answers/cash-out-life-insurance
updated: 2026-10-08
---

# Can I cash out my life insurance policy?

Updated October 8, 20264 sourcesCoverfolk team[Fact checked](/editorial-standards)

The short answer

Yes, if it is a permanent policy with cash value. You get the cash surrender value, but your coverage ends.

The cash surrender value is what you get when you end a permanent policy. It is your cash value minus fees, loans and past withdrawals.

Most policies charge surrender fees for the first 10 to 15 years. The fee is highest in year one and goes down a little each year.

You may owe taxes if what you get back is more than you paid in premiums. Only the gain is taxed.

Once you cash out, your family gets no death benefit. Make sure you do not still need the coverage.

Term life has no cash value, so there is nothing to cash out.

* Take part of the cash value out
* Borrow against it
* Use the cash value to pay premiums
* Sell the policy

## More questions

### Will I owe taxes?

You may. If you get back more than you paid in premiums, the extra is usually taxable income.

### Can I sell my policy instead?

Yes. A policy is your property and you can sell it. Texas regulators say there are things to think about first, so get advice.

### Is cashing out early a bad idea?

It often pays very little. Cash value is small in the early years and fees are highest then.

## Words to know

[Cash value](/glossary)
:   The savings part of a permanent policy. It grows over time and can be used for loans, cash, or to pay premiums.

[Premium](/glossary)
:   The amount you pay an insurance company for your policy.

[Surrender value](/glossary)
:   The cash you get if you cancel your policy early. Charges and any loans are taken out first.

## Sources

1. [NerdWallet: What Is the Cash Surrender Value of Life Insurance?](https://www.nerdwallet.com/article/insurance/cash-surrender-value-of-life-insurance)
2. [SC Department of Insurance: Life Insurance FAQs](https://online.doi.sc.gov/Eng/Public/faqs/lifefaq.aspx)
3. [Texas Department of Insurance: Life Insurance](https://tdi.texas.gov/CONSUMER/life-insurance.html)
4. [NAIC: Life Insurance](https://content.naic.org/consumer/life-insurance.htm)