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Roger, Lawyer
Category: Consumer Protection Law
Satisfied Customers: 30898
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I have a WHOLE LIFE policy with MetLife. For 20+ years. When

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I have a WHOLE LIFE policy with MetLife. For 20+ years. When I bought the policy, I was told, "though life insurance policies grow at a slow rate, your cash value is guaranteed not to go down as with variable type policies that are based on the rise and fall of the stock market". I understand that. I have a new agent and I don't know him well. I asked him about getting some cash out due to unexpected issues that have resulted in my be short handed and I don't want to get behind on my bills.
There is one amount listed as both 'surrender value' and 'cash value'. I am unhappy and confused with his answer about withdrawal v loan via email. He said, "it's your money and you can have it within a week". "It's a loan but not really a loan, if you don't want to repay the principle you should at least pay the interest"
I asked him to elaborate. He replied, "I got my hand slapped for what I said already.." and would not email further info. Pleae make very clear my rights/why the secrecy?
Submitted: 7 years ago.
Category: Consumer Protection Law
Expert:  Roger replied 7 years ago.
It is not a loan, it is essentially cashing out what you've paid into the policy over the years. With a whole life policy, you have to cash out the entire policy; you can't just take part.

If you cash out your life insurance policy, you may owe income tax on any amount you receive above what you paid in premiums. But it's unusual to see someone owe taxes because most policies are loaded with front-end fees, it can take 12 to 15 years before the cash value is greater than the premiums paid. You're only taxed on the earnings, not the entire cash value.
Customer: replied 7 years ago.
I'm sorry I can't accept your answer yet, as you did not really answer my question re: loan v surrender. I have no intention of surrender and I didn't tell you I wanted to. As to your point of having to cash out entire policy, this can't be right as I received several thousand dollars about 4 years ago in an emergency cash situation from this same policy---that was nowhere near the cash value. At that time I was told that was the most I could withdraw without taking out a loan on/against the policy.
On that point, are you saying 'cash out' is the same as surrender?
I already knew abou the tax info you gave me.
I also asked you why the secrecy with the agent, not wanting to put anything more in writing. Please clarify these points..
Expert:  Roger replied 7 years ago.
You'll have to ask the agent about the secrecy.

As far as cashing out, I have never seen a whole life policy that you can partially cash out/surrender for face value. If you actually take money from the policy, you have to cash the entire policy in. It may be that the company loaned you $4k based on the amount of interest it was generating on the money, and they just took that amount back on interest payments generated by your policy. You'll have to check and see exactly how that was done.

As for a loan, you may borrow up to the amount of the accumulated cash value. A loan against your life insurance policy accrues interest and reduces the death benefit. Thus, if you don't pay the money back or pass away before it is paid back, it is deducted from the payout.
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