Can I get a refund when I cancel my insurance?
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Asked June 22, 2010
That depends on what kind of insurance you are talking about cancelling, and what kind of refund you are expecting. If you have paid your auto insurance premium for an entire year, for example, you will be entitled to a refund of the unused portion of the premium payment, minus handling fees. On the other hand, a whole life insurance policy has a defined cash payout at any time the policy is cancelled.
In the case of a term life insurance policy, you may not be able to recover any of the money you paid in at all. But whole life is treated differently, and the account can paid down to the amount invested, less dividends earned on the interest accrued. Instead of a refund on the policy, you actually receive the current immature payout.
Another type of coverage that could be refunded when canceled is Gap insurance coverage on a vehicle. This type of insurance can be cancelled and the money paid in, less handling and other fees, back to bank which holds the lien on the vehicle. You will not see any reduction in payments, but the length of the loan will be reduced, allowing you to pay it off sooner with a lower amount of interest.
Answered June 22, 2010 by Anonymous