How Soon Can You Access Your Cash Value?

The purpose of this post is to answer the question: “How soon can I access the cash value of the policy?”. I get this question so often that I’m surprised I haven’t addressed it in a post before now. I like to make sure that everyone can find everything they want to learn without ever talking to an agent.


The goal of this post is to let you know how soon you can access the cash value in a properly-designed maximum over-funded policy.

So if this sounds interesting to you, keep reading.

Cut To The Chase 

The cash value in a properly-designed, maximum over-funded life insurance policy can be leveraged immediately. However, it is important to keep in mind that we are talking about a properly-designed, maximum over-funded life insurance policy. This means one that has all the proper riders that will waive the surrender charges.


Most life insurance policies:

1. Do not allow loans to be taken in the first year and

2. Include surrender charges that severely limit the amount of cash value that can be leveraged.

Indexed Universal Life 

Surrender Charges

It is important to realize that almost every life insurance policy includes surrender charges that limit how much cash value that can be accessed in the first 10 to 15 years. This means that even if the policy design looks maximum over-funded i.e. the cash value is about 85-90% of the premium amount in Year 1, you need to look at the Surrender Value. If the policy does not include a rider to waive the surrender charges, the surrender value will be significantly lower than the actual cash value in the policy.

This highlights the importance of working with an agent who understands how to design maximum over-funded policies that can be leveraged immediately for The Double Play. This rider is a must-have for The Double Play.

Loan Options 

You should be aware that there are multiple options for getting a loan. Many policies include fixed, variable or indexed loan options. You can also go to a 3d party bank and get a cash value line of credit that is secured by an assignment of collateral against the policy.

Fixed Loans

Don’t use a fixed loan! This is not the optimal way to access the cash value. The cash value securing the loan is moved into the company’s fixed interest crediting account. You don’t want that. Unfortunately, many companies only offer a fixed loan during the first 5 years of a policy.

Variable and Indexed Loans 

It is important to make clear that if you want to be able to borrow from the insurance company, you need to find and use an insurance company that offers either a variable or an indexed loan option immediately. There are relatively few of these in the universe of potential companies for The Double Play.

Cash Value Line of Credit 

Now keep in mind that what I stated for policy loans above does not apply to a cash value line of credit (CV-LOC). If you intend to use a CV-LOC, then it doesn’t matter what loan options are available from the company. However, you should recognize that flexibility is also important. There is a time and place for using a policy loan and/or a CVLOC.[1]

Whole Life 

It’s important to point out that a Maximum Over-funded Whole Life is constructed much differently from an Indexed Universal Life. Ultimately, the same premium for the same insured should result in roughly the same death benefit and cash values. However, there is much more to a Whole Life design because it is a blend of a base policy, a term rider, and paid-up additions.

While the base policy itself may be subject to surrender charges, the paid-up additions are completely liquid and can be leveraged immediately. This should be the bulk of the premium in a properly-designed policy.

You want a Whole Life that offers a variable rate loan option. You also have the option of getting a CV-LOC from a 3d party bank.


The goal of this post was to let you know how soon you can access the cash value of a maximum over-funded life insurance policy. The answer, of course, is immediately.

However, it is important to understand what riders and features need to be available in a life insurance product for the cash value to be available immediately. We want a policy with a variable loan option and, in the case of an Indexed Universal Life, we want a policy with a rider that allows the surrender charges to be waived.

[1] https://innovativeretirementstrategies.com/Blog/why-you-shouldnt-use-a-policy-loan-if-you-leverage-your-cash-value-to-invest-in-real-estate/

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