Term Life Insurance Articles
How To Cancel A Life Insurance Policy Without Assessing Penalties
2011-11-01
Rising insurance costs have hit all aspects of the industry - from auto and health insurance to long term care and even life insurance. Companies are finding that they are at higher risk than ever before to insure Americans, due in part to the global economic climate and in part to the aging "baby boomer" population. A life insurance policy is now more costly than one ten or even twenty years ago, despite the wealth of options for plans and providers that can be found online. What this means for Americans is that there are times they may wish to cancel a life insurance policy in favor of another, better option - but is it possible to do so without assessing penalties?
First, it is important to understand a crucial distinction in life insurance. There are two main types of life insurance available on the market - whole life and term life. The operate much like the sound, with whole life covering and individual from the moment they take out the plan to the moment of their death. During that time, a client will pay a monthly fee for service, and it is possible to remove all or a portion of the money allotted for the purposes of investment or college education. A term life policy, meanwhile, is for a fixed number of years, and can expire before the life of the policyholder has expired. Term life policies do not allow for investment or other uses of the monies that will be paid out, but typically have a far lower monthly premium.
In the case of a whole life policy, canceling early will typically result in all of the money that has been earmarked for the policy being lost. It is possible to find plans where money is accrued on a yearly basis, and only a part of the money will be taken back. Because of the "whole life" nature of these policies, fees will often be assessed if a client chooses to leave.
Term life policies, meanwhile, will not come with a monetary penalty if they are quit early, since no money has been disbursed. The only penalty that a client may face is if they attempt to then find another term life policy - their new insurance company may choose to charge a higher monthly premium or insist on a waiting period before any death benefits become active.
Rising insurance costs in make finding the best deals on any type of insurance, including life insurance, essential, and while it is possible to leave a life insurance plan with no fees, it can often cost in other, less obvious ways. Make sure to review the terms of any agreement before canceling.
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Rising insurance costs have hit all aspects of the industry - from auto and health insurance to long term care and even life insurance. Companies are finding that they are at higher risk than ever before to insure Americans, due in part to the global economic climate and in part to the aging "baby boomer" population. A life insurance policy is now more costly than one ten or even twenty years ago, despite the wealth of options for plans and providers that can be found online. What this means for Americans is that there are times they may wish to cancel a life insurance policy in favor of another, better option - but is it possible to do so without assessing penalties?
First, it is important to understand a crucial distinction in life insurance. There are two main types of life insurance available on the market - whole life and term life. The operate much like the sound, with whole life covering and individual from the moment they take out the plan to the moment of their death. During that time, a client will pay a monthly fee for service, and it is possible to remove all or a portion of the money allotted for the purposes of investment or college education. A term life policy, meanwhile, is for a fixed number of years, and can expire before the life of the policyholder has expired. Term life policies do not allow for investment or other uses of the monies that will be paid out, but typically have a far lower monthly premium.
In the case of a whole life policy, canceling early will typically result in all of the money that has been earmarked for the policy being lost. It is possible to find plans where money is accrued on a yearly basis, and only a part of the money will be taken back. Because of the "whole life" nature of these policies, fees will often be assessed if a client chooses to leave.
Term life policies, meanwhile, will not come with a monetary penalty if they are quit early, since no money has been disbursed. The only penalty that a client may face is if they attempt to then find another term life policy - their new insurance company may choose to charge a higher monthly premium or insist on a waiting period before any death benefits become active.
Rising insurance costs in make finding the best deals on any type of insurance, including life insurance, essential, and while it is possible to leave a life insurance plan with no fees, it can often cost in other, less obvious ways. Make sure to review the terms of any agreement before canceling.
