When most people think of the traditional definition of life insurance, thoughts immediately drift towards the old-fashioned whole life policies that your parents and grandparents might have relied upon. While it’s true that those traditional whole life policies haven’t changed drastically over the last few decades, they still serve extremely useful purposes, even in these modern times. 

Furthermore, although whole life insurance isn’t the only type of life insurance that accumulates cash value, its simplicity and methodical nature distinguish it from its cousins in variable and universal life insurance. In other words, even in this dynamic world, old-fashioned solutions still have their place.

Excess Cash Value

For older policies that have been growing at a steady rate for several years, it’s not unheard of to be sitting on excessive cash value with no specific purpose other than continuing to accumulate. In those particular cases, policyholders can contact the insurance carrier to negotiate a swap of cash value for an additional death benefit. Given the tremendous tax efficiencies with life insurance death benefits, this can be especially useful for estate planning.

Put Your Premiums on Cruise Control

Likewise, when sufficient cash value accumulates within a policy, the policy itself can become self-sustaining regarding monthly or annual premiums. Once again, a simple phone call to the insurance carrier can result in the company allowing the accumulated cash value to pay for the monthly premiums on the policy. This will have no negative impact on the death benefit itself, and depending on the cash value within the policy and the rate of return, it might not even have a drastic effect on the cash value.

Take a Withdrawal on the Cash Value

Once again, depending on how much cash has accumulated within the policy, many carriers allow you to take withdrawals from the cash value. If life were to suddenly throw you a financial curveball that, for whatever reason, you were not well-prepared for, the cash value of your whole life policy could come in handy in those times of need. However, since nothing is perfect in this world, be prepared for your death benefit to take a hit by such withdrawals. The total amount of lost benefit is different with every carrier, so be sure you have all the information needed to make a well-informed decision.

Convert Your Cash Value to Retirement Income

Since your policy’s cash value grows tax-deferred, it can also be very useful in providing retirement income as long as you have sufficient death benefits elsewhere to serve your estate planning needs. While this income solution is quite a bit more costly and is rarely referred to as simply using an employer-sponsored retirement plan or an IRA to generate retirement income, converting cash value to a stream of income can be very helpful to those who find themselves in this particular situation. 

Do you have an old whole life insurance policy with an accumulated cash value? Is it still part of your comprehensive Financial Plan? Let us review it to see if it still makes sense. Simply click here or call (763) 445-2772 to schedule a complimentary consultation today!

Note: This content was updated March 2025.