Can I Surrender My Money Back Policy?

The majority of Canadians find life insurance to be an entry-level point for financial planning. Being different from the other different types of life policies available, other than the death benefit, a Money Back Life Insurance Policy will accumulate periodical returns on the premiums paid. Therefore, many individuals select it due to its hybrid nature, which is relative to the advantages of the benefits of insurance coverage and returns on investment. But then the only thing that is constant is change, and there may be times when one may have to surrender his Money Back Policy. Whether it is caused by financial constraints, changes in objectives, or personal reasons, giving up policy is something that has to be determined with thought and care.

Understanding Money Back Life Insurance Policy

An endowment plan under which a percentage of the sum assured is returned at regular intervals of the policy term in place of a lump sum amount at the end of the term. This can be an amazing feature for all those who need periodic payouts to meet various financial goals at different points in their life. Suppose the insured survives the term of the policy, the concern receives the balance sum assured and any other diffused bonuses. In the unfortunate event of the insured's death during the policy term, the nominee receives the full sum assured, regardless of the payouts already made.

Find Out: About Money Back Policy in detail

Reasons to Surrender a Money Back Policy

The decision to surrender a Money Back Policy is not to be taken lightly. Here are a few reasons policyholders might consider when they decide to surrender:

• Financial hardship: If you are in a poor financial state, you will not be able to pay premiums, so your surrender saves you from making those payments.
• Better investment opportunities: There probably may be some other better form of investment that will yield more returns than those promised by your current Money Back Policy.
• Change in financial goals: Circumstances in life change, and so do the financial goals; so what was once a very good investment may now not fit well with your current financial planning.
• Policy dissatisfaction: Maybe the returns are not as good as you thought they would be, or the terms are no longer favorable, such as high costs of insurance, and you decide to surrender.

The Implications of Surrendering

Here are a few things to consider before actually surrendering a Money Back Life Insurance Policy :

• Surrender Charges: Most life insurance policies have a stipulation of a surrender charge that is applicable and is duly deducted from the cash value. Most such charges are usually reduced over the period for which the policy was taken.
• Loss of Insurance Cover: As should be quite obvious, when you surrender your policy, you lose life insurance coverage. This can become quite a big disadvantage down the road if the coverage is hard to find or expensive due to changed health conditions.
• Tax Implications: Proceeds received from the surrender of a policy can be taxable. While it is best to discuss this with a tax professional, knowing the tax impact would be worthwhile.
• Return of Premium: Depending upon the time that a policy is surrendered, one may get back less than the total premium paid. This is especially true if the policy was surrendered early in its term.

How to Surrender Your Policy

Here are a few things to consider before actually surrendering a Money Back Life Insurance Policy:

• Surrender Charges: Most life insurance policies have a stipulation of a surrender charge that is applicable and is duly deducted from the cash value. Most such charges are usually reduced over the period for which the policy was taken.
• Loss of Insurance Cover: As should be quite obvious, when you surrender your policy, you lose life insurance coverage. This can become quite a big disadvantage down the road if the coverage is hard to find or expensive due to changed health conditions.
• Tax Implications: Proceeds received from the surrender of a policy can be taxable. While it is best to discuss this with a tax professional, knowing the tax impact would be worthwhile.
• Return of Premium: Depending upon the time that a policy is surrendered, one may get back less than the total premium paid. This is especially true in case the policy was surrendered early in the term of the policy.

Getting Money Back Life Insurance Quotes

Before you turn off the lights, it may be worth looking at the latest Money Back Life Insurance Quotes. Comparing these quotes can give you the slightest idea as to whether your current policy is getting priced competitively or whether policies are in the market that cater more to evolving needs. Insurance company websites and others will be available to assist you in comparing personalized quotes in accordance with your needs and profile.

The Bottom Line

Cashing out your Money Back Life Insurance Policy in Canada is a very important decision and does have some long-term implications for your financial health. It is important to analyze all factors and, if necessary, speak with financial and tax consultants to further ensure that the decision fits into your long-term financial goals. Remember, the right choice varies from person to person, depending on personal circumstances and financial goals. Thorough research and professional advice can be invaluable as you make this decision.