The ability to cash out on a life insurance policy depends on the type of policy you have. There are two main types of life insurance: term life insurance and permanent life insurance.
Term life insurance provides coverage for a specific term, such as 10, 20, or 30 years. If the insured person passes away during the term of the policy, the beneficiaries will receive a payout. However, if the insured person outlives the term, there is no cash value or payout.
On the other hand, permanent life insurance, which includes whole life insurance and universal life insurance, provides coverage for the entire lifetime of the insured person. These policies have a cash value component, which grows over time. After a certain period, usually several years, the policyholder can access the cash value by surrendering the policy or taking out a loan against it.
It's important to note that surrendering a policy or taking out a loan can have tax implications, so it's recommended to consult with a financial advisor or an insurance specialist before making any decisions. Additionally, the terms and conditions for cashing out on a life insurance policy may vary depending on the specific policy and insurance company, so it's always best to review your policy documents or contact your insurance provider for accurate and up-to-date information.