Pros of Policy Surrender-
Cons of Policy surrender-Premature withdrawal is subject to certain penalties. As mentioned earlier, you only get accumulated cash value on withdrawal. Here are some disadvantages of terminating an insurance contract:
- After canceling it, all the benefits that you’re receiving from it would suppose to be ceased. In simple words, you will no longer to be covered.
- In future, if you will buy an insurance policy for yourself then you would have to pay higher premiums for the same benefits; because normally premiums are calculated on the basis of age factor.
- Remember you only get saving portion of your policy commonly known as surrender value.
- You get surrender value after certain deductions such as; surrender charges and excluding first year premiums (in some policies).
- Remember not all policies offer surrender value. Only policies that have embedded saving components acquire surrender value or cash value.
- You may not be entitled to get cash value if you surrender your policy before specified time or lock-in period (say 3 years or 5 years).
- You may not be entitled to receive special bonuses if you surrender before the policy term.
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