Surrendering a life insurance policy.

Jerichoholic

A relative has a life insurance policy expiring next year and will only pay out if she dies before that, otherwise the insurance company keeps everything. Does this sound right?

Can she cash out or surrender it before that?

Thanks

coylemj

It sounds like a term policy in which case the answer (to the question: Does this sound right?) is yes. A term policy covers you for death within a set period, typically while you have dependent children. When the period expires, the policy expires and you both walk away.

A term policy has no accumulating benefits or savings. Your annual premium only covers the risk of death within that year, nothing is set aside for a termination bonus.

homer911

There may also be the option of extending it without additional medical checks etc, depending on the policy. If your relative is in ill health, this may be worthwhile

Jerichoholic

Wow, so there's no way she can get back even a little of the money she's spent over the years, it all goes to the insurance company?

coylemj

Jerichoholic wrote: »

Wow, so there's no way she can get back even a little of the money she's spent over the years, it all goes to the insurance company?

It doesn't all go to the insurance company, a significant portion of your relative's premium went to pay benefits to the next of kin of people who had the same cover with the same insurance company and who died in the same period.

If your house doesn't catch fire, do you ask your home insurance company for a rebate?

Fol20

It’s an insurance policy like a car where “if” something happens you are covered. “If” nothing happens you get nothing. If you wanted to, you could probably cancel now and stop paying it going forward however you won’t get back anything you might have paid for the past 30 years. If they had something like that everyone would be opting out of it.

Henry Ford III

Jerichoholic wrote: »

Wow, so there's no way she can get back even a little of the money she's spent over the years, it all goes to the insurance company?

Short of dying within the term - no she can't.

It's a pure protection policy, with no investment element.

Heres Johnny

Term insurance policies with no savings element like this one are generally cheaper than whole of life policies which have a cash surrender value.

This policy isn't really being surrendered it's expiring. Could be continued though which is worth checking out.