When you’re playing Monopoly and you pull a card saying your life insurance policy has matured, you collect $100. In real life, if your policy matures, you’ll probably get a lot more.
A permanent life insurance policy will remain in force for the insured’s whole life or until the policy’s maturity date, as long as the premiums are paid. When the policy matures, it simply means that the cash value of the policy now equals the death benefit. When you buy any type of permanent life insurance, your premiums go into two “buckets.” Funds in one pay for the death benefit, or life insurance portion of your policy. Funds in the other build over the years to create the policy’s cash value. Eventually, the cash value will equal the death benefit, and your policy has matured.
Most policies mature when the policyholder reaches either age 65 or 100. If your policy matures when you reach 100, it will continue to cover you until age 121…and you won’t have to pay premiums.
Once a policy matures, the insurer may pay the cash value to the policy owner. Gains received from a matured policy will count toward taxable income. This differs from a policy’s death benefit, which the beneficiary receives tax-free. To avoid this, you can keep the policy in force or transfer your cash balance to another policy.
We can help you evaluate the different types of life insurance to find the one best suited for your family’s protection and savings needs. Please contact us for more information.
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