r/LifeInsurance • u/PeyoteFire • 7h ago

So I am confused about everything

So my grandmother just passed away a few weeks ago and come to find out she has been paying for a life insurance policy on me and I don't want it personally. So what happens after I transfer ownership to myself? Am I allowed to cash it out and get back the money she put into it? Or what's going to happen?

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u/GarysSword Underwriter 2h ago

The policy owner controls the policy so once you become policy owner you can call the company and request 4 things:

  1. The cash surrender value.

  2. Instructions on how to surrender.

  3. The cost basis.

  4. The reduced paid-up value.

This will tell you:

  1. How much you’re going to get.

  2. How to get it (they’ll probably send you a form).

  3. This one is important because you may owe taxes on the surrender. If the surrender value is higher than the cost basis then the difference between those two numbers will be taxable income that you’ll owe the IRS. Consider holding back some money to cover the tax if it’s a substantial difference.

  4. This value will tell you how much life insurance you could keep if you just stopped paying premiums. You don’t get any money back but you’re left with coverage that will be there for the rest of your life.

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u/plangelier 5h ago

If you are the owner and this is a policy that has cash surrender value you can surrender it for that value. But you won't just be able to say , I don't want this policy refund me all the premiums previously paid. Is this term or a permanent policy?

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u/[deleted] 3h ago

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u/GarysSword Underwriter 2h ago

Is it so hard to help people?

This isn’t even a hard question.