What Does Liquidity Mean In A Life Insurance Policy? 
Permanent life insurance policies can accumulate cash values for liquidity purposes . Depending on the type of policy and when youre attempting to liquidate cash values , will determine if you have liquidity . Liquidity is in the eye of the beholder . How much liquidity is necessary , only the policy owner can define ? That being said , be advised , that non modified endowment contract policy loans may have a price tag . Policy loans provisions can charge from zero to 400 basis points depending upon what life insurance policy you own . But you need to be careful about taking withdrawals of basis in the first 15 years of a policy that has gain in the policy . Certain policies are subject to the force out rule and can actually expose the policy owner to a taxable event . The first step is to order an in force ledger to determine the total cash value less surrender charges and policy expenses . Then then have the life insurance company predetermine if access to cash values can be achieved without a taxable event . Keep in mind that the contract must be kept in force for the life of the insured -LRB- not the policy owner -RRB- or a taxable event could occur . 