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- If you cancel or exceed your term life insurance policy, we will not refund your money.
- however, if you have a “return of premium” rider and you outlive the policy, your premiums will be refunded.
- If you have a convertible term life policy, you can sell it instead of canceling it.
- policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »
If you cancel your term life insurance or your policy lapses, you won’t get your money back unless you’ve added an additional “return of premium” rider.
If you no longer need your term life insurance, instead of canceling it, you can sell it if it’s a convertible term life policy.
Can I get the money back if I cancel or outlive my term life insurance?
Term life insurance has a term of 10, 20 or 30 years.
If you have a term life insurance policy and cancel it, you lose all premium payments you’ve paid, along with the death benefit. if you stop making payments, the policy expires and is no longer valid. If you outlive the policy, meaning you haven’t had a claim when it expires, you won’t get any refund for the premiums you paid.
Some insurers have term life insurance policies with a “return on premium” feature, which returns some or all of the money you’ve already paid if you haven’t used the policy after your term ends.
“return of premium” term life insurance
Return of Premium is an optional rider for term life insurance policies. increases the cost of your insurance premium. May not be available for all types of term life insurance or with all insurance providers.
If you have a return-of-premium term life policy, you’ll pay higher premiums, but your premiums will be returned if you outlive the policy.
Can I sell my term life insurance policy?
According to Lucas Siegel, CEO of Harbor Life Liquidations, 85% of life insurance policies expire, meaning the insured outlive the policy or stop paying.
There are two ways to sell your life insurance policy: (1) a viatical settlement; and (2) a life insurance agreement. each has different requirements.
For a viatical settlement, the insured individual must have a terminal medical diagnosis. however, a life insurance settlement does not require a terminal diagnosis.
In each case, the policyholder forfeits any rights and death benefits. therefore, if he needs to leave money to his family, this might not be a good option.
what is a viatical settlement?
A viatical settlement is when an insured person with a terminal diagnosis is paid death benefits from their life insurance policy.
siegel gave the example of a cancer patient with a $1 million term life insurance policy who was struggling to pay for medical treatment. if she simply canceled the insurance policy, she would not have received any money. however, Harbor Life Settlements offered him $600,000 for his term life policy.
what is a life insurance settlement?
If you don’t have a terminal diagnosis and want to sell your term life insurance policy, you can use a life insurance settlement instead of canceling your policy. Siegel said that people who have convertible term life insurance policies typically apply for a life insurance settlement.
A convertible term life policy can be converted to permanent life insurance with a cash value benefit in addition to the death benefit.
consult an expert before selling your life insurance policy
If you are considering selling your term life insurance policy due to a terminal illness or because you have a convertible term life policy, talk to your insurance agent or financial advisor to review the process, including fees or taxes. associates.
once you sell your term life insurance, you lose all rights to the policy, specifically the death benefit. If your family needs the death benefit, this may not be the best option for you. however, if your family is financially comfortable on their own and you don’t need the death benefit, then it may work for you.
Consider your financial needs and goals. It is advisable to consult an accountant, probate attorney and financial advisor about your financial situation and goals to determine what is best for you and the tax implications. It’s worth taking the time to find the best option for you, because once you’ve sold your policy, you’ll lose that coverage.