Can I just surrender my policy back to the insurance company instead?

June 30, 2016
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One option that life insurance policyholders do have is to surrender the unwanted policy back to the company that issued it. While this is definitely an option, this may not be the best option for everybody.

Often, a life settlement may be a more beneficial option for those with an unneeded life insurance policy.

Before choosing to surrender the policy back to the insurance company, policyholders should think of all their options.

Weigh the options

One survey by Conning and Company estimates that over 20% of life insurance policies on seniors have a greater value than the cash surrender value of the policy.

So, if these seniors chose to surrender the policy instead of taking the life settlement option, they could be leaving significant sums of money on the table.

Advantages of a life settlement

The United States Government and Accountability Office discovered that in the year 2010, those policyholders who chose the life settlement option received between four and seven times the money that the cash surrender value would have offered them.

In the United States, more than $100 billion worth of life insurance policies exceed the cash surrender value of the policies.

A new perspective

Because these numbers are shocking to most, consumers must be aware of their options before choosing to surrender the policy. Policyholders should view their policies as they would other assets.

The secondary insurance market has exploded in recent years, which highlights the fact that more investors and more financial institutions are looking at the life settlement option as a viable financial tool. They feel life settlements serve as another wealth-building tool that may provide their clients with more financial options.

 Choose value

Weigh all of your options carefully before you decide to surrender the policy back to the insurance company. You may be leaving money on the table, money that you and your family could use for other expenses.

Before choosing any option with your life insurance policy, look at all options carefully. Then, contact your financial advisor for the possible benefits of the life settlement option. He or she can help you determine if a life settlement is a better option than surrendering your policy back to the insurance company.

If you or someone you care for has an unneeded or unwanted life insurance policy, contact us. Your first consultation is complimentary and will inform you of your options in regard to a life settlement.

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