Whether you can cash in a life insurance policy depends on what kind it is. The term and whole of life protection policies from Aviva, Legal & General and Zurich quoted below have no cash-in value. Savings-type policies, such as Royal London's with-profits endowments and Whole Life policies for existing customers, can be surrendered for a sum of money.

If you are looking at an existing policy, its own paperwork or its insurer settles the question. If you are thinking about new cover instead, the quote form here hands your details to an FCA-authorised broker, who can talk through what is available.

What does cashing in or surrendering a life policy mean?

Surrendering a policy means ending it early in return for a payment. Royal London's existing-customer page puts it simply: "Surrendering means cashing in your policy early." The amount paid is the surrender value, sometimes called the cash-in value or cash surrender value. The protection policies quoted below have none: they pay only on a valid claim. American websites use "cash value" for a savings element in some US policies; nothing below relies on US rules.

Cashing in also differs from cancelling or letting a policy lapse, which is covered in what happens to life insurance if you cancel.

Does term life insurance have a cash-in value?

Not on the two insurers' documents quoted here. Aviva's Life Insurance Plan summary (DA03008, May 2023), the term policy its direct life insurance page links to, says: "The policy has no cash-in value at any time."

Legal & General's Life Insurance FAQs page, read in October 2026, says: "Please remember that life insurance is not a savings or investment product and has no cash value unless a valid claim is made." So with these policies, money comes out in one situation: a valid claim. How term cover works is in how term life insurance works.

Policies that return money if nothing is claimed are a separate question: see term life insurance with cash back.

Can you cash in a whole of life policy?

It depends which kind you hold.

Protection-only whole of life

Legal & General's Whole of Life Protection Plan summary (LG2588, June 2025, published on its adviser site) describes cover meant to last for the rest of the life insured's life and pay a lump sum on their death, and states: "The policy has no cash-in value at any time." Zurich's Whole of Life Key Features (February 2025), for a policy sold through financial advisers, likewise give it no cash-in value. That is two insurers, not the whole market; the product itself is explained in what whole of life insurance is.

With-profits whole of life

Royal London's product guide for existing holders of its Whole Life Assurance policies, invested in its with-profits RLCIS OB & IB Fund (MKT2621_RL, April 2026), is described as "a concise reminder of the main features of the product(s) which you have purchased". It says: "You can surrender your policy at any time." It continues: "At the time of surrender we will pay a fair value based on the payments you have made, plus any investment return we have achieved, less any expenses we have incurred. This value may be lower than the amount we guarantee to pay on death."

The guide itself notes that "Many different types of Whole Life policies have been sold over the years", so your own policy document is what counts. The varieties of whole of life cover are set out in types of whole of life insurance.

What decides how much you would get?

Royal London's documents for its existing savings-type policies point to a few things:

  • What you have paid in and what it earned. The Whole Life guide's fair value, quoted above, starts from your payments and investment return, less expenses.
  • Timing. The endowment page says "Cashing in early may mean that you may get back less than you have paid into the policy."
  • Bonuses. On early surrender, "you will not get the same amount back from your plan and any final bonus will not be included".
  • Which part of the policy. On the same Whole Life policy, "The Income Benefit part of your policy does not have an investment element and so there is no surrender value payable."
  • Whether someone else has a claim. If a policy "has been assigned", the "rights to claiming on the policy have passed to someone else, for example a bank or building society".

The figure itself comes from the insurer that holds the policy. The documents add that "If you cash in a policy that includes life cover, the life cover will stop, so we won’t pay anything when the life assured dies", and that "While we can provide information, we cannot advise you what to do."

Any new cover would be a fresh application, assessed on your age and health when you apply. To see what replacement cover might involve before giving anything up, use the quote form here; a broker authorised by the FCA can check how several insurers would view your circumstances, with nothing to pay. Options such as reducing the cover are covered in changing your cover.

Is the money from cashing in taxable?

It can be, and the tax question has its own page: is a life insurance cash-out taxable. HMRC's Insurance Policyholder Taxation Manual (IPTM1560, read in October 2026) says: "A chargeable event gain is deemed to form part of the chargeable person’s income." It adds that "The chargeable person, if an individual, will in many cases be treated as though tax at basic rate had been paid on the gain."

That describes HMRC's framework, not anyone's own tax position, and the rules can change. Whether insurance works as an investment at all is weighed in whether life insurance is a good investment.

Can you sell a life insurance policy instead?

Selling is not the same as surrendering. The FCA's consumer page on traded life policy investments (last updated 19 August 2021, read from an archived copy) looks at this from the buyers' side: "Investors hope to benefit by buying the rights to the insurance pay-outs on the deaths of the original policyholders." It says the policies behind these investments are "typically of US citizens", and its warning is plain:

Traded life policy investments (TLPIs) are complex products that are generally unsuitable for the mass retail market.

It adds "TLPIs are high-risk investments" and says most of these products are offshore and so outside its regulatory scope, which means investors are unlikely to be protected by the Financial Services Compensation Scheme if things go wrong. It is a warning to investors, not guidance for a policyholder who wants to sell.

For tax, HMRC's manual (IPTM1500) counts a sale as a chargeable event: its rules wait until benefits are paid "or the policy is assigned,including a partial assignment, to another holder for value, and a chargeable event arises". If a policy is in trust or has been assigned to a lender, the policyholder is not the one who can sell it; life insurance trusts explains who owns a policy in trust.

Frequently asked questions

Can I cash in my life insurance if I have paid into it for years?

Paying for years does not by itself create a cash-in value: the Aviva, Legal & General and Zurich protection policies above have none however long they have run. A with-profits policy such as the Royal London one above may have a surrender value, and your policy documents say which kind you hold.

How do I find my surrender value?

Ask the insurer that holds the policy. Royal London's page tells existing endowment customers to call and says "we will send out a claim form" to complete and return with the policy document.

Can I borrow against or withdraw money from a life insurance policy?

Not on the protection policies quoted above, which have no cash-in value to draw on. For endowments, Royal London's existing-customer page lists alternatives to cashing in, depending on the terms and conditions of your particular policy: stopping, reducing or taking a break from paying the premium.

Does life insurance earn interest or grow in value?

Not on the protection plans above. Aviva's term summary says stopped payments mean no cover, with nothing refunded of what you have paid. Royal London's with-profits Whole Life guide says "We aim to add annual bonuses to your policy", with "no guarantee" in any year, and that stopping payments "will reduce the value of the policy and the amount of life cover you have".

When you are ready to look at new cover, the next step is the form here: leave your details and a broker regulated by the FCA will call you back, at no charge.

Sources

  • Aviva, Life Insurance Plan Policy Summary (DA03008 05/2023), read 18 October 2026. static.aviva.io
  • Legal & General, Life Insurance FAQs, read 18 October 2026. legalandgeneral.com
  • Legal & General, Whole of Life Protection Plan Policy Summary (LG2588, June 2025; published on its adviser site), read 18 October 2026. legalandgeneral.com
  • Zurich, Zurich Whole of Life Key Features (February 2025; sold through financial advisers), read 18 October 2026. zurichintermediary.co.uk
  • Royal London, Whole Life Assurance: Reminder of important facts (MKT2621_RL 04/2026; product guide for existing RLCIS with-profits policies), read 18 October 2026. royallondon.com
  • Royal London, Cash in an endowment policy (existing customers), read 18 October 2026. royallondon.com
  • Royal London, Surrenders and maturities FAQs (existing customers), read 18 October 2026. royallondon.com
  • FCA, Traded life policy investments (last updated 19 August 2021; archived copy of 12 March 2023), read 18 October 2026. web.archive.org
  • HMRC, Insurance Policyholder Taxation Manual, IPTM1560 and IPTM1500 (updated February 2022), read 18 October 2026. gov.uk