Skip to main content

Get your free personalized life insurance quote.

An asset is basically anything that increases your overall financial worth. For example, a stock that pays dividends is an asset. A home that you have equity in is also an asset. With all the money you may have paid or will pay for insurance, you might want to know whether or not you’re gaining an asset. Find out below: Is life insurance an asset?

Is Life Insurance an Asset?

Life insurance can be an asset, but not all policies are. Whole life insurance and other comparable permanent life insurance policies are assets; term life policies generally are not.

The reason for this relates to cash value. Permanent insurance policies have a cash value whereas term life policies don’t. You can sell a whole life insurance policy or cash out, therefore it's an asset.

The best way to think about this is to consider the concept of buying versus renting. When you rent a house, you aren’t gaining an asset; you’re just paying for the ability to live there. With term insurance, you also aren't buying an asset. You’re simply paying for the service of insurance.

On the other hand, when you buy a house, you're investing in an asset for the future. When you purchase whole life or similar life insurance policies, you may be doing the same. 

Can I Withdraw Money From My Whole Life Insurance?

You usually can withdraw cash from a whole life policy, but it's not as simple as, say, taking money out of a savings account.

One way you would do this is to just surrender the policy and receive the full cash value of the policy and end the policy. This might not be the wisest decision, though, as you may receive less money than you put in and will have no death benefit.

You can also take out smaller amounts of money and keep the policy. These withdrawals are generally not taxable because they aren't income; they're considered a return of your premium purchase. They become taxable if you withdraw more than you put in (by paying premiums) as that would then be considered income. Any withdrawals you make reduce the benefit paid out to beneficiaries when you die.

As you can see, using life insurance as an asset can get complex. Work with an agent to plan ahead or talk to a financial planner if you're considering using whole life insurance or other types of insurance as an investment or asset for your future.

Learn More