You can cash out a Primerica life insurance policy, but what you receive depends on the policy type and how long you've held it

Primerica sells two main types of life insurance: term life and whole life (called "PrimeCare"). Term policies have no cash value — if you stop paying premiums, the coverage ends and you get nothing back. Whole life policies do build cash value over time, and that's what you can access. The amount you receive is less than your death benefit and may be less than what you've paid in, especially in the early years.

The process is straightforward: you contact Primerica, request a surrender of the policy, and they send you a check for the cash surrender value. This ends your coverage permanently. Before you do this, you should understand what you're giving up and whether the money is worth losing the death benefit your beneficiaries would have received.

Key Takeaways

  • Primerica term life policies have no cash value and cannot be cashed out — you either keep paying or lose coverage with nothing returned.
  • Whole life policies (PrimeCare) build cash value that you can access by surrendering the policy, but you'll receive less than your total premiums paid in the first 10 to 15 years.
  • Surrendering a policy ends your death benefit coverage permanently, so make sure you don't need the insurance before you cash out.
  • You can also borrow against the cash value of a whole life policy without surrendering it, which keeps your coverage in place.

The difference between term and whole life cash value

Primerica's term life policies are pure insurance — you pay a monthly or annual premium for a set period (usually 10, 20, or 30 years), and if you die during that term, your beneficiaries get the death benefit. If the term ends and you're still alive, the policy expires with no payout. There is no cash value component, so there is nothing to cash out.

Whole life policies (PrimeCare) combine insurance with a savings component. Part of your premium goes toward the death benefit, and part goes into a cash value account that grows over time. This cash value is what you can access. In the early years of a whole life policy, most of your premium goes to commissions and fees, so the cash value grows slowly. After 10 to 15 years, the cash value typically becomes substantial enough to be worth considering.

To find out which type you have, check your policy documents or call Primerica directly. Your policy will say "term" or "whole life" clearly on the first page.

How much you'll receive when you surrender

The amount Primerica sends you is called the cash surrender value. This is not the same as your death benefit and not the same as what you've paid in premiums. It's the amount the insurance company calculates as the net value of your policy after subtracting fees, charges, and surrender penalties.

Surrender penalties are steepest in the first 5 to 10 years. A policy you've held for 2 years might have a cash surrender value of only 30 to 50 percent of premiums paid. By year 15 or 20, the surrender value is usually much closer to what you've actually paid in. Primerica can tell you the exact surrender value for your policy if you ask — they're required to provide this in writing.

The surrender value also depends on how well the insurance company's investments have performed and what interest rates are at the time you cash out. This means the value can fluctuate slightly year to year.

How to cash out your Primerica policy

Contact Primerica directly by phone or through your online account. You can find the customer service number on your policy statement or on Primerica's website. Tell them you want to surrender your policy and receive the cash surrender value.

Primerica will send you a form to sign. This form confirms that you understand you're ending your coverage permanently and that you accept the cash surrender value amount. Once you sign and return it, they'll process the request and mail you a check, usually within 5 to 10 business days.

Before you sign, make sure you have other insurance in place if you still need life insurance coverage. Once the policy is surrendered, it's gone — you can't change your mind and reactivate it later. If you want coverage again, you'll have to apply for a new policy and go through underwriting again.

Borrowing against your policy instead of surrendering

If you need money but want to keep your life insurance in place, you can borrow against the cash value of a whole life policy instead of surrendering it. This is called a policy loan. You borrow money from the insurance company using your cash value as collateral, and you pay interest on the loan.

The advantage is that your death benefit stays active. If you die while the loan is outstanding, Primerica pays your beneficiaries the death benefit minus the loan balance plus any unpaid interest. The disadvantage is that you're paying interest on money that's technically yours, and if you don't repay the loan, the interest compounds and can eventually reduce your death benefit to zero.

Policy loans are usually cheaper than personal loans or credit cards, but they're not assistance programs. Ask Primerica what interest rate they charge on policy loans and whether the rate is fixed or variable before you borrow.

Tax consequences of cashing out

In most cases, cashing out a life insurance policy is not a taxable event. The IRS generally does not tax the surrender of a life insurance policy as long as you receive less than or equal to the total premiums you've paid. If the cash surrender value is higher than your total premiums (which is rare in the early years), the excess amount may be taxable as ordinary income.

This is a general rule, and your specific situation may differ. If you've had the policy for many years and the cash value has grown substantially, or if you've taken policy loans that reduced your cost basis, talk to a tax professional before you surrender. They can tell you whether you'll owe taxes and how much.

What to consider before you cash out

Cashing out a life insurance policy is permanent. You lose the death benefit, and if you want coverage again later, you'll pay higher premiums because you're older and may have developed health issues. If anyone depends on your income — a spouse, children, a business partner — losing that coverage could leave them unprotected.

Also consider whether you actually need the money or whether you're cashing out because premiums feel high. If premiums are the issue, you might reduce your death benefit instead of surrendering the entire policy. This keeps some coverage in place and lowers your monthly payment. Primerica can tell you what your premium would be if you reduced the benefit.

If you're cashing out because you think the policy is a bad investment, remember that life insurance is not primarily an investment tool — it's protection. Whole life policies do build cash value, but they're not designed to compete with stocks or bonds. If you want better investment returns, a separate investment account might make more sense than keeping a whole life policy.

Frequently Asked Questions

Can I cash out a Primerica term life policy?

No. Term life policies have no cash value. If you stop paying premiums, your coverage ends and you receive nothing. You can only cash out a whole life policy (PrimeCare).

How long do I have to hold a whole life policy before the cash value is worth cashing out?

Most whole life policies don't build meaningful cash value until year 10 to 15. Before that, surrender penalties and fees mean you'll get back less than you've paid in. After 15 years, the cash value is usually substantial enough to be worth considering.

What happens to my death benefit if I take a policy loan instead of surrendering?

Your death benefit stays active, but it's reduced by the loan balance and any unpaid interest. If you die with an outstanding loan, your beneficiaries receive the death benefit minus what you owe.

Do I have to pay taxes on the money I receive when I cash out?

Usually no, as long as the cash surrender value doesn't exceed your total premiums paid. If it does, the excess is taxable as ordinary income. Talk to a tax professional if you're unsure about your specific situation.

Can I reactivate my policy after I surrender it?

No. Once you surrender a policy, it's terminated permanently. If you want coverage again, you'll have to apply for a new policy and go through underwriting, which means higher premiums based on your current age and health.