Some variants of life insurance can be considered liquid assets. Liquid assets are things that you can easily turn into cash, such as your investment account. Life insurance is a liquid asset for your beneficiaries when they collect the death benefits. However, you can consider your life insurance policy a liquid asset in the following instances:
Your life insurance policy comes with a cash value component- Once the cash value has accumulated, you can withdraw cash from your policy, as you would from a retirement account.
You can exchange your insurance policy for cash - Policyholders who are elderly or serious may be allowed to sell their policy when they don’t need it anymore. Such arrangements are also called viatical settlements.
It’s worth noting that as an investment tool, life insurance policies have several drawbacks. Notably, they typically offer a relatively low return on investment (ROI). However, these policies can be useful if you’ve fully utilized your other investment options. An independent insurance agent will help you figure out if the liquidity offered by a policy suits your needs.