How to Change the Maturity Date of Life Insurance

As you pay premiums on the account, the policy accumulates a "cash value" that's similar to the equity on your home loan. In an "endowment" life policy, once the cash value equals the policy's "face value" -- the amount that's paid out upon the death of the insured -- the policy has reached its maturity date. This is similar to paying off the last of the principal on your home loan.

"Risk cost" is a number set by insurance actuaries that determine how much money a policy must make to be profitable. If not using an endowment method to determine maturity date, a policy will mature when the interest on the cash value exceeds the "risk cost" assessed for the insurance.

Pushing back the maturity date on a policy just requires reducing the cash value. You can do this by taking a loan out against the policy. This is a standard option on all whole life products, and reduces the cash value by the amount of the loan plus some fees. The maturity date then extends as far into the future as it takes to pay off the extra money. You can also just skip some payments. Your insurer will make the payment for you by automatically taking a loan out of the cash value.

Bringing forward the maturity date requires either increasing the current cash value or renegotiating the terms of your policy. Some insurance companies will let you simply add extra money to the account, much like paying extra principal on your mortgage. Renegotiating the policy essentially means cancelling your existing coverage and buying a new policy with an earlier maturity date. Not all companies allow both or either of these options, and those that do allow it sometime charge high fees for the change.

Every whole life insurance policy has a "surrender value." the amount the policy would be worth if you stopped paying premiums at that time. The surrender value equals the cash value, minus a variety of fees. People typically withdraw the surrender value when they stop paying premiums. However, you can also use the surrender value to purchase a policy with a paid-up death benefit. Since "maturity date" is essentially when a policy is paid up, this process accomplishes the same result but gives it a different name.

Term life insurance policies have no maturity date, cash value or surrender value. Though they are the most common kind of life insurance held by Americans, they're not relevant to this discussion.