What is a Life Insurance Policy Value Letter?

rock I am nearly finished with the process that one must go through in order to cancel, and cash out, a life insurance policy. After going through all the steps, and filling out the required form, I thought I was done. Then, this unexpected letter arrived from my insurance company. It seems to be a Policy Value letter.

I have outlined and described the four steps that I needed to go through in order to get my insurance company to understand that I wanted to cash out my life insurance policy. In short, the first thing I had to do was call the insurance company that I had the life insurance policy through, and tell them that I wanted to cash out my policy. The first agent I spoke with advised me to be certain that I had completely thought about everything, before I did it.

The second step was to call the insurance company a second time, and make the same request. This result was that the insurance company was going to send me a form in the mail that I must fill out and send back. The third step, unexpectedly, involved going through the two page letter of warning that was sitting on top of the form I wanted. It wasn’t until the fourth step that I was finally able to fill out the form that I need to mail back to the insurance company.

I thought that I was done. Instead, this other letter arrived, which required my attention. At the top of the letter, it says, in bold print: “Your Policy Values”. If you have told your insurance company that you want to cash out your life insurance policy, then you want them to send you one of these forms. It is good to have this in your records, in case there are any discrepancies between the amount of money they said you would receive, and the amount you actually end up getting.

The letter starts with a short paragraph that basically says that the insurance company is aware that I want to cash out this policy. Next, there is a section describing my “life insurance profile”. It points out, in bold print, the amount that would be awarded as the Net Death Benefit. After this, it shows data about my “Policy Values”. In bold, once again, it shows the Net Cash Value.

There is a significant difference between these two amounts. I believe that the information is printed like this specifically so that the insurance company can make one more attempt at talking me out of cashing out my policy. I think they want me to look at the Net Death Benefit, notice that it is quite a bit higher than the Net Cash Value, and reconsider. I thought it was interesting to share this unexpected letter, though, because it seems to be part of the process.

Image by By-Your on Flickr

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About Jen Thorpe

I have a B.S. in Education and am a former teacher and day care worker. I started working as a freelance writer in 2010 and have written for many topics here at Families.com.