How to Money · Monday, September 28, 2026
Lori inquired about surrendering a $15,000 cash value life insurance policy to put the funds into a high-yield savings account. She is concerned about increased student loan payments due to Public Service Loan Forgiveness (PSLF) rules, as any additional income could affect her payment calculations. The hosts advised reviewing the policy's cost basis to understand the taxable gain and how it might impact her student loan payments, suggesting that cashing out might be beneficial despite the PSLF wrinkle.
“As an aside, I max out my 401k, and I also almost max out my 403b through my employer, and my children are both grown, yet not fully self-sufficient at this point.”
“You are only taxed on the amount beyond what you've paid in. So let's say you've paid $11,000 into it, $15,000 payout. Well, that's going to increase your income by $4,000. You're only going to be taxed on that $4,000.”
“The stakes are low and the chances to simplify and do something better with this money without impacting her taxes significantly. And while also not massively inflating her student loan payment, I think that probably is going to be the best move for her.”