Reference: Can I withdraw insurance money early? in the US

Reference: Can I withdraw insurance money early? in the US Can You Withdraw from a Life Insurance Policy Before Maturity?

Participating in life insurance is a long-term investment, providing comprehensive protection against risks and offering multiple benefits upon maturity. However, in certain unforeseen situations, policyholders may consider withdrawing funds before the contract matures. But is early withdrawal allowed? How will it affect your insurance benefits and the payout at maturity?

Let’s explore the answers together with Prudential in the article below.
Reference: Can I withdraw insurance money early? in the US

Is It Possible to Withdraw Life Insurance Funds Before Maturity?

Essentially, life insurance is a solid financial solution that requires a long-term commitment from the policyholder, involving regular premium payments and maintaining the policy until maturity. Therefore, withdrawing early may negatively impact the benefits received.

• If withdrawal is made within the first two years of the policy:
  The policyholder will not receive any refund of the premiums paid.

• If withdrawal is made after two years but before the maturity date:
  The policyholder may receive a partial refund, but this amount will definitely be lower than the total premiums already paid.

This is because insurance companies incur various costs to activate and maintain the policy, such as:

• Initial costs

• Policy administration fees

• Risk protection fees

• Fund management charges

• Policy cancellation charges, etc.

According to the Law on Insurance Business, from the 10th policy year onward, the surrender value (the cash value returned upon early termination) may equal the total premiums paid. If the policy is withdrawn before this point, the policyholder may not receive the full expected value.

✅ So, should you withdraw your life insurance early?
The answer is: Not recommended.
The earlier you withdraw, the more benefits you forfeit.

🔎 The "surrender value" is the amount refunded to the policyholder if the life insurance contract is terminated early (applicable only to policies that include this feature). It is calculated as the account value minus any outstanding debt (if applicable).

What Should You Consider Before Withdrawing From a Life Insurance Policy?

If you still wish to withdraw your life insurance funds early, consider the following three options to minimize potential losses:

1. Partial Withdrawal from Policy Account Value (After Two Years)

The account value of a life insurance policy represents the current amount in the policy account, derived from allocated premiums and investment returns, after deducting various costs and charges.
Reference: Can I withdraw insurance money early? in the US

To make a partial withdrawal, the policyholder must:

• Submit a written request to the insurance company

• Be the contract owner, and

• Meet the following three conditions:

1. The withdrawal amount must not exceed 80% of the actual Cash Value of the policy.

2. Each withdrawal must be no less than the minimum withdrawal amount, as defined by the insurer at that time.

3. After withdrawal, the remaining balance in the policy account must not fall below the minimum value required by the insurer.

2. Full Withdrawal of Policy Account Value (Policy Termination)

Full withdrawal occurs when the policyholder requests to cancel the policy before its maturity by submitting a written notice to the insurer. If approved, the contract is terminated, and the policyholder may receive the surrender value (if any), which is the account value minus any outstanding debt.

However, this option is strongly discouraged, as early termination can cause significant financial loss to both the policyholder and the insurance provider. Specifically:

• The policyholder loses all insurance protection, and

• May receive no refund at all (if canceled within the first two years), or only a small refund (if canceled after two years).

⚠️ Carefully consider your decision before canceling your life insurance policy.

3. Policy Loan (Advance Against Account Value or Surrender Value)

While the policy is still in force, the policyholder may request a cash advance based on either the account value or surrender value, depending on the specific product. The conditions include:

• The policy must be at least two years old, or already have an available surrender value.

• The total advance must not exceed 80% of the surrender value after deducting any outstanding loans.

• The loan amount must also meet the minimum loan threshold set by the insurance company at that time.
  Reference: Can I withdraw insurance money early? in the US

Final Thoughts

We hope this article has clarified the question: "Can you withdraw from a life insurance policy before maturity?" Life insurance is a long-term financial plan—the longer you maintain it, the greater your benefits upon maturity.

Therefore, it’s best to carefully evaluate your circumstances before deciding to withdraw funds early. For more support or advice, don’t hesitate to reach out to Prudential or your insurance advisor.