What Happens When a Whole Life Insurance Policy Matures?

What happens when a whole life insurance policy matures? The short answer: the policy endows, you stop paying premiums, and either you or your beneficiaries receive the payout. But the real answer depends entirely on what kind of policy you own and how it was designed.

If you’re Googling this question, you’re probably worried about one of two things. Either you’ve heard that the insurance company “takes your money” when a policy reaches its end date, or you’ve read somewhere that you’ll get hit with a massive tax bill if you live past age 100. Both fears are understandable — and both are largely based on misunderstanding what maturity actually means for a properly designed whole life policy.

This guide breaks down exactly what policy maturity is, when it happens, what you receive, and why the “maturity problem” that dominates most articles on this topic is really a product design problem — not a whole life insurance problem.

What Does It Mean for a Whole Life Policy to Mature?

A whole life insurance policy “matures” when the policy’s cash value equals the death benefit. At that point, the contract has fulfilled its purpose — the policy endows, premiums stop, and the maturity value is paid to the policy owner.

Think of it this way: the insurance company has been accumulating reserves against the obligation to pay your death benefit. When the cash value catches up to the death benefit amount, there’s no longer any insurance risk — the company already has the full amount set aside. The policy has reached its mathematical conclusion.

This is called a “matured endowment,” and it triggers a payout to the policy owner if the insured is still living.

The key point most articles miss: maturity isn’t the insurance company canceling your policy or taking your money. It’s the policy reaching its designed endpoint — and you receiving the full value.

When Does a Whole Life Policy Mature?

The maturity date depends on when your policy was issued, because different eras used different mortality tables to calculate policy endpoints.

If you purchased your whole life policy in the last 15-20 years, your maturity date is almost certainly age 121 — an age only one person in recorded history has ever reached. For practical purposes, your policy will be in force for your entire life.

If you have an older policy issued before the 2001 CSO tables took effect (roughly 2004-2006), your policy may mature at age 100. This is where things get more interesting — and where having the right guidance matters.

What Do You Receive When Your Policy Matures?

When a whole life insurance policy matures, the insurance company pays the maturity value to the policy owner. This is typically equal to the death benefit amount (since by definition, the cash value has grown to equal the death benefit at maturity).

Here’s what that means practically:

No more premium payments. The policy is paid up. You don’t owe another dollar. For policies designed with paid-up additions, this may have already happened years or even decades before the official maturity date — as dividends and accumulated value eventually covered premium obligations on their own.

You receive the maturity value. The insurance company sends you the full maturity amount, typically as a lump sum. You can also explore settlement options like converting to an annuity or electing a maturity extension rider (more on this below).

Coverage terminates. Once the maturity value is paid out, the life insurance policy is no longer in force. There is no further death benefit because the full amount has already been distributed to you.

Tax Implications of Policy Maturity

Here’s where maturity gets less fun. When you receive the maturity value while alive, it’s not treated the same as a death benefit.

A death benefit passes to beneficiaries income tax-free. A maturity payout, however, is taxable to the extent it exceeds your cost basis in the policy — meaning the total premiums you’ve paid over the life of the contract.

For example, if you paid $150,000 in total premiums over the life of your policy and the maturity value is $500,000, the $350,000 difference is taxable as ordinary income in the year you receive it. That’s a significant tax event that can push you into the highest bracket for that year.

This is one of the key considerations when evaluating whole life insurance — and one of the reasons policy design and maturity planning matter. The goal with a properly designed whole life policy is to maximize the income tax-free death benefit for your beneficiaries, not to collect a taxable maturity payout.

Read our complete guide to life insurance taxation →

Does the Insurance Company Keep Your Cash Value?

No. This is one of the most persistent myths in life insurance, and it’s worth addressing head-on.

The insurance company does not keep your cash value when a policy matures. You receive the maturity value — the full amount. The policy endows, you get paid, end of story.

Now, there is a related question that causes confusion: what happens to the cash value when you die? With most whole life policies, your beneficiaries receive the death benefit — not the death benefit plus the cash value separately. People hear this and assume the insurance company is “keeping” something. That’s not how it works. The cash value and the death benefit converge over time — by maturity, they’re the same number. And with a participating whole life policy designed for growth, the death benefit itself has been growing year after year through paid-up additions and dividends. Your beneficiaries aren’t getting shortchanged — they’re getting a death benefit that’s potentially multiples of the original face amount.

The “company keeps your money” narrative comes from people who don’t understand how participating whole life works. Or worse — from people selling term insurance who benefit from you believing it.

The Real Maturity Problem (And Why It Doesn’t Apply to Whole Life)

Almost every article about policy maturity treats it as a crisis. And for some people, it genuinely is — but not for the reasons most articles claim.

The real maturity problem exists primarily with universal life (UL) and variable universal life (VUL) policies. Here’s why:

With whole life, the cash value and the death benefit are designed to converge. Every year, both values grow. By the time the policy matures, they’ve met in the middle (or more accurately, the cash value has risen to meet the death benefit). The math works because the policy was designed to work.

With universal life, the cash value and the death benefit are not linked in the same way. UL policies have flexible premiums and internal costs of insurance that can increase dramatically as you age. If the policy is underfunded — which happens frequently when people pay the minimum premium — the cash value can be far below the death benefit when maturity hits. In some cases, the policy lapses entirely before reaching maturity, leaving you with nothing.

That’s the maturity “crisis” you read about. It’s a UL design problem, not a whole life problem.

The maturity “problem” is really a product design problem. Buy a policy where the death benefit never grows and the cash value sits there like trapped equity in a home, and yes — maturity looks scary. Buy a participating whole life policy from a mutual insurance company designed for cash value growth and active use, and maturity is simply the day your premiums stop and your policy has done exactly what it was designed to do.

Policy Maturity vs. Modified Endowment Contract (MEC)

These two concepts get confused constantly, so let’s draw a clear line.

Policy maturity is when the policy reaches its contractual endpoint — typically age 100 or 121. The cash value equals the death benefit, premiums stop, and the policy endows. This is a natural conclusion of the contract.

A Modified Endowment Contract (MEC) is a tax classification that occurs when you overfund a policy — meaning you put in more premium than the IRS allows under the 7-pay test. A MEC doesn’t mean your policy matured. It means you crossed a funding threshold, and the tax treatment of your withdrawals and loans changes (from FIFO to LIFO, with a potential 10% penalty before age 59½).

These are completely different events with completely different implications. A policy can become a MEC in year 2. A policy matures at age 100 or 121. One is a funding issue, the other is a time issue.

Both matter for your financial planning, but they require different strategies. We’ve written a comprehensive deep dive on the Modified Endowment Contract — the Good, the Bad, and the Ugly — which covers the 7-pay test, how to avoid MEC status, and when a MEC might actually work in your favor.

What Maturity Looks Like When the Policy Is Designed Right

Most articles about maturity assume you’ve been passively holding a policy for 60 years, doing nothing with it. That’s not how we build policies, and it’s not how our clients use them.

When you own a properly structured whole life policy from a top mutual carrier, designed with maximum paid-up additions, here’s what decades of ownership actually look like:

The death benefit has grown substantially. Through dividends and paid-up additions, the death benefit on a participating whole life policy grows year over year. A policy purchased at age 35 with a $500,000 initial death benefit could have a death benefit north of $2,000,000 or more by the time the insured reaches their 70s and 80s. By maturity, the number is significantly higher than what you started with. This is one of the core advantages of whole life insurance — the benefit grows as you age, right when it matters most.

The policy may already be paid up. With policies designed for high paid-up additions, dividends can eventually cover the premium obligation entirely. Many policyholders stop making out-of-pocket premium payments well before maturity because the policy’s own performance carries it forward. Learn more about paid-up life insurance →

You’ve been using the cash value for decades. If you’ve been practicing infinite banking — taking policy loans, recycling capital through your policy, and using the cash value as your own financial system — the policy has already delivered enormous value during your lifetime. Maturity isn’t the first time you get value from the policy. It’s the last chapter of a book that’s been paying dividends (literally) for decades.

The real goal is the death benefit. For most whole life policyholders, the ideal outcome is never reaching maturity at all. You pass away with the policy in force, and your beneficiaries receive an income tax-free death benefit that has grown substantially over the years. That’s the design. Maturity at 121 is the backstop, not the target.

Your Options as Maturity Approaches

If you have an older policy approaching maturity (particularly one with a maturity age of 100), you have several options depending on your carrier and policy terms:

Maturity Extension Rider (MER). Many carriers offer riders that extend the policy past the original maturity date — sometimes to age 121. This preserves the death benefit and delays the taxable endowment event. However, these riders typically need to be elected years in advance, so check your policy now if this applies to you.

1035 Exchange. You can exchange your existing policy for a new one with an updated maturity date (age 121 on current tables) without triggering a taxable event, as long as the exchange meets IRS requirements under Section 1035. This is often the best option for those with policies maturing at 100 who are still in reasonable health.

Annuity conversion. Rather than receiving a taxable lump sum, you may be able to convert the maturity value into an annuity that spreads the tax liability across multiple years. This won’t eliminate the tax, but it can keep you from getting crushed by a single-year spike in taxable income.

Accept the maturity payout. If you’ve planned for the tax consequences and want the cash, you can simply accept the maturity value. Work with a tax professional to understand the impact and plan accordingly.

Do nothing (if eligible for continuation). Some carriers allow the policy to continue past maturity in a paid-up status, potentially still earning dividends and maintaining a death benefit. This is carrier-specific and depends on your policy terms.

Regardless of which path makes sense, the important thing is to act early. If your policy matures at 100 and you’re currently in your 70s or 80s, now is the time to review your options — not when the maturity notice arrives.

Frequently Asked Questions

What happens to my whole life insurance when I turn 100?

It depends on when your policy was issued. Older policies (issued before roughly 2004) may mature at age 100, meaning the cash value equals the death benefit and the policy endows. You’d receive the maturity value, but the payout above your cost basis is taxable as ordinary income. Newer policies mature at 121, so turning 100 has no effect on the policy — your coverage continues and premiums remain unchanged.

Does the insurance company keep my cash value when the policy matures?

No. When a whole life policy matures, the insurance company pays the full maturity value to you. The confusion comes from a separate question — what happens to cash value at death — where beneficiaries receive the death benefit rather than the death benefit plus the cash value separately. At maturity, cash value and death benefit are the same number, and you get it.

Is the maturity payout from a whole life policy taxable?

Yes. The portion of the maturity value that exceeds your cost basis (total premiums paid) is taxable as ordinary income. This is different from a death benefit, which passes to beneficiaries income tax-free. This is one reason it’s generally preferable for a policy to remain in force until death rather than reaching maturity. Read our full guide on life insurance taxation →

What’s the difference between a policy maturing and becoming a Modified Endowment Contract?

Completely different events. A policy matures when it reaches its contractual endpoint (age 100 or 121) and the cash value equals the death benefit. A Modified Endowment Contract (MEC) is a tax classification that happens when you overfund a policy relative to the 7-pay test — this can happen in the early years of a policy and has nothing to do with the maturity date.

Can I extend my policy past the maturity date?

In many cases, yes. A maturity extension rider (MER) can push the maturity date from age 100 to 121, preserving the death benefit and deferring the taxable event. However, these riders often need to be elected well in advance, so check with your carrier as early as possible. You may also be able to do a 1035 exchange into a new policy with an updated maturity age.

Does the death benefit on a whole life policy grow over time?

On a participating whole life policy from a mutual insurance company, yes. Dividends and paid-up additions increase both the cash value and the death benefit over time. This is one of the primary advantages of whole life insurance — the death benefit grows as you age rather than staying flat or expiring like term insurance.

What happens if I have a policy loan when my policy matures?

Any outstanding policy loan balance (including accrued interest) will be deducted from the maturity value before payout. If the loan balance is significant relative to the maturity value, the taxable gain could still be substantial even if you receive a smaller net payout. This is another reason to monitor outstanding loans as you approach potential maturity.

Is the maturity problem unique to whole life insurance?

No — in fact, the maturity problem is far worse with universal life and variable universal life policies. With those products, the cash value and death benefit aren’t linked in the same way, rising costs of insurance can erode cash value as you age, and underfunded policies can lapse before ever reaching maturity. With a properly designed whole life policy, maturity is predictable and the outcome is by design, not by accident.

Should I worry about my whole life policy maturing if I bought it recently?

Almost certainly not. Policies issued in the last 15-20 years use mortality tables that set the maturity age at 121. Unless medical science makes dramatic advances in your lifetime, your policy will remain in force for as long as you need it. Focus instead on policy design — making sure your policy is structured for growth, not just minimum coverage.