Globe Life Insurance: Can You Cash In?

Globe Life Insurance offers term life and whole life insurance without a medical exam, with coverage limits lower than standard life insurance policies. The company has received a high level of complaints, with issues surrounding claims payments, policyholder service delays, policy cancellations, and claim denials. Despite this, their insurance policies are available in all US states, with insurance products also available in New York from the Globe Life Insurance Company of New York.

In terms of cashing out, you can borrow against your whole life insurance policy in two ways: withdrawals against the cash value or a loan against the cash value. Withdrawals will reduce the available cash value and lower your death benefit, while a loan is a separate agreement with the insurance company as the lender and must be repaid. You can also totally cash out of your whole life insurance policy, which will return the cash value of the policy, less some fees, and will cancel the policy.

Borrowing from the cash value

Benefits of Borrowing from the Cash Value:

• No lengthy application process: Borrowing from your policy's cash value typically doesn't require a lengthy application process, unlike other types of loans.
• No credit check: If you have built up enough cash value, you can usually borrow money without undergoing a credit check.
• Lower interest rates: Policy loans generally have lower interest rates compared to other types of loans.
• Flexible repayment terms: You have the flexibility to set your own repayment schedule, and there is no requirement for monthly payments.

Drawbacks of Borrowing from the Cash Value:

• Reduced death benefit: If the loan is not repaid in full, it could result in a reduced death benefit for your beneficiary.
• Loss of policy: There is a risk of losing your policy if the interest and unpaid loan amount exceed the remaining cash value.
• Impact on coverage: Borrowing against your life insurance policy will impact your coverage, and you may need to adjust your premium schedule accordingly.

Before making a decision, it is essential to consult with your insurance company to understand how taking out a loan will specifically impact your policy. Consider the potential risks to your beneficiary's death benefit and explore all available options, including alternative sources of funding such as personal loans or other financial assistance.

Cash value withdrawals

If you need quick access to cash but don't want to give up your life insurance coverage or ownership, you can consider withdrawing from your policy's cash value. This option is typically best for those who need immediate cash but want to maintain their insurance. The amount you can withdraw depends on your specific policy and provider, but it is usually less than a policy loan.

Withdrawals from your cash value do not need to be repaid, which is a key difference from borrowing against your policy. However, there are some drawbacks to this option. Firstly, it will reduce or deplete the available cash value of your policy. Secondly, it will lower your death benefit. There may also be potential tax implications, and you may need to consider the impact of modified endowment contracts.

Before making any withdrawals, it is important to carefully consider the benefits and drawbacks and how they will affect your coverage, benefits, and premium schedule. It is also recommended that you consult a professional tax advisor or financial advisor to understand the full financial impact of this decision.

By understanding the options available, such as cash value withdrawals, borrowing against the policy, surrendering the policy, or exploring alternative sources of funding, you can make an informed decision about cashing in your Globe Life Insurance policy.

Surrendering your policy

When you surrender your policy, you are essentially cancelling it. Your insurer will terminate your coverage and send you a cheque for the policy's cash surrender value. This is the money a policyholder receives for ending their coverage before the maturity date or before they pass away. It is important to note that this amount is typically less than the total sum in the savings component of permanent policies, as surrender fees and taxes will be deducted.

To surrender your policy, contact your life insurance representative to discuss the implications and determine the cash surrender value you will receive.

Life insurance settlements

A life insurance settlement is the sale of a life insurance policy to a third party, known as a life settlement provider. The owner of the policy sells it and receives an immediate payment in return. The life settlement provider then becomes the new owner of the policy, paying any future premiums and receiving the death benefit when the insured person passes away.

This option is best for those with a higher cash value in their policy. It is important to note that not all life settlement transactions are regulated, so it is crucial to research the purchasers to see if they are licensed and regulated. The amount received will depend on factors such as age, health, and policy terms and conditions. It is generally more than the policy's cash surrender value but less than the net death benefit.

There are several factors to consider when deciding whether to sell your life insurance policy:

• Ongoing Life Insurance Needs: If you plan to buy a new policy with the proceeds, will you be able to get equivalent coverage, and at what cost?
• Less Costly Alternatives: If you need cash, there may be other options available under your current policy that allow you to keep it in force, such as borrowing against your policy or pursuing accelerated death benefits.
• Difficulty Determining Fair Prices: It can be challenging to know if you are getting a fair price for your policy. It is recommended to shop around and get multiple offers to ensure you get a competitive price.
• Impact on Your Finances: The lump-sum payment received may be taxable and could negatively impact your eligibility for state or federal public assistance programs.
• Impact on Your Survivors: Consider your current income needs against the future financial needs of your survivors.
• Access to Your Health Information: Buyers of your policy may have access to personal information about you, including your health status, and may require periodic updates.

If you decide to pursue a life insurance settlement, here are some important questions to ask:

• Do you know who you are working with? Are they licensed and do they have a record of complaints?
• What will happen to my policy? Will the buyer hold it, sell it individually, or package it with other policies?
• What information will I need to provide, and to whom? How long will they have access to this information?
• How can I protect my privacy? What are the privacy policies of all parties involved?
• What is the best price I can get for my policy? Are there multiple offers to choose from?
• What are the transaction costs? How are the brokers and agents involved being compensated?
• What if I change my mind? Are there laws in my state that allow for a change of mind or a cooling-off period?
• Am I being pressured to make a quick decision? A legitimate investment professional will give you time to make an informed decision.

Alternative to cashing out: personal loans

If you're struggling financially but don't want to cash out your life insurance policy, you may want to consider applying for a personal loan. This option can provide you with quick access to the money you need, usually at reasonable interest rates. Personal loans are available from banks, credit unions, and private lenders.

Before taking out a personal loan, it's important to consult a financial advisor or accountant to determine the best course of action for your specific situation. They can help you understand the potential impact on your financial situation and whether this is a more suitable option than cashing out your Globe Life Insurance policy.

Personal loans typically require a credit check, and the interest rates and repayment terms can vary depending on your credit score and other factors. It's important to carefully review the terms and conditions of any loan agreement before making a decision.

Additionally, personal loans may have different tax implications compared to cashing out a life insurance policy, so it's essential to be aware of any potential tax consequences.

By exploring this alternative, you can make a more informed decision about your financial choices and ensure that you are considering all available options to address your financial needs.

Frequently asked questions