Accessing a life insurance payout before you die is possible — and you may qualify for a large lump sum payment that’s income tax free.
Can you get life insurance payouts before you die? Yes — but only if you understand your options and act fast. Certain types of life insurance policy, like whole life insurance or universal life, include features that allow you to withdraw cash or take loans against the cash value component.
And for many, the most powerful option is to sell the life policy entirely — unlocking a lump sum payout while avoiding income taxes and future premium payments. We explain how life insurance payouts work, how much cash value you may be eligible for, and how to use your policy to access money now — not after the policyholder dies.
Get a fast, confidential estimate from American Life Fund today and find out how much of your life insurance payout you can access right now.
Sell Your Life Insurance Policy for a Lump Sum Payment While You’re Still Alive
Selling your life insurance policy — through a life settlement or viatical settlement — is one of the most effective ways to get a large lump sum payment before the policyholder dies. If you own a whole life insurance policy, universal life policy, term life insurance policy, FEGLI life policy, or a life policy through your employer, you may be able to sell your life policy for cash and receive up to 70% of the policy’s death benefit in hand — without waiting for the insured to pass.
This process allows you to access the life insurance payout now, without going through the life insurance claim or claims process. The payout is based on your life expectancy, the policy’s cash value, and the size of the life insurance coverage. In many cases, these payments are income tax free under the Internal Revenue Code, especially if you qualify due to a terminal illness.
Unlike taking a loan or making premium payments for years, selling the policy ends your obligation to pay premiums and replaces it with immediate access to funds you can use for medical expenses, financial support, or anything else.
American Life Fund specializes in helping individuals convert their policy into a high-value cash asset — fast, confidentially, and with no upfront costs.
See if you qualify and get cash now!
Tap Into the Cash Value of Permanent Life Insurance — With Caution
Permanent life insurance policies like whole life insurance and universal life include a built-in savings feature known as the cash value component. Over time, as you make premium payments, your cash value grows tax deferred and becomes available to use while you’re still alive.
You can withdraw cash directly or take a bank loan against the policy’s cash value. These options give you flexibility without canceling the life insurance coverage — but they come with conditions. Withdrawals that exceed the amount of premiums paid can create income tax liability. A loan amount left unpaid may reduce the policy’s death benefit or cause the policy to lapse.
If the policy terminates with an unpaid loan, you may owe taxes on the remaining balance. Plus, the more you withdraw, the less your life insurance beneficiary receives — or they may get nothing if the policy lapses.
This route offers some access, but it often delivers less money, comes with hidden risk, and leaves you responsible for managing the policy carefully. For those who want immediate access without future obligations, selling the policy for cash may offer a more stable, larger payout.
What You Can’t Do — Myths About Getting Life Insurance Payouts Before Death
Many people assume they can simply cash out their full death benefit or make a life insurance claim while still alive. But that’s not how life insurance payouts work.You can’t access the death benefit unless you you sell the policy through a life settlement. Some believe term life insurance allows early access, but a term life insurance policy typically holds no cash value and offers no payout before the insured passes unless they also sell their policy through a life settlement.
There’s also confusion around retained asset accounts or interest bearing account options — these are tools used after a death benefit payout is made, not ways to access your policy’s value during life.
Installment payments, accidental death clauses, and primary beneficiary changes all apply post-claim. If you’re looking for immediate access to your policy’s value while still alive, your viable options are limited — and clearly defined. Knowing these boundaries helps you avoid delays and focus on the strategies that actually work.
Turn Your Life Insurance Into Immediate Financial Relief
If you’re asking “Can you get life insurance payouts before you die?” — you’re likely ready to act now. Whether you’re dealing with medical expenses, changing financial priorities, or just want control over your life policy, American Life Fund helps you access a lump sum payment quickly, privately, and without pressure.
Don’t settle for waiting, guessing, or losing value. Find out how much cash your policy could provide right now — with no obligation and no cost to get started.
Get your free estimate from American Life Fund today or call (877) 261-0632
Do I have to pay taxes on life insurance proceeds I access while still alive?
Life insurance proceeds accessed during your lifetime — such as through a viatical settlement — are often income tax free. However, if you take withdrawals or loans that exceed the amount you paid into the policy, you may have to pay taxes on the gains.
Can I receive interest payments on my policy if I don’t cash it out?
Some permanent policies offer interest payments through retained asset accounts after the policyholder passes, but this only applies post-claim. These features do not provide living benefits or access while you’re still alive.
Can I access benefits from my policy if I’ve had it my entire life?
Yes, policies held for your entire life, such as whole life insurance, typically accumulate cash value that you can access. Additionally, you may qualify for a lump sum through a life settlement.
What if my policy only covers a specified period of time?
If you have term insurance that only lasts for a specified period, you usually can’t access any value unless it includes a living benefits rider — or unless you sell your life insurance policy through a life settlement.
Can selling my policy be denied if I wasn’t fully truthful when applying?
If the policyholder lied during the original application process — especially within the contestability period (typically the first few years) — it could affect your ability to sell the policy or receive a full payout.
