FGL told me by law I only get a 40 percent refund of my policy value, is this true?

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Asked July 28, 2016

1 Answer


It is required that life insurance companies refund a percentage if not all of the cash your policy has accrued since purchasing your insurance if there is a cash value balance . The law only states that an insurance company does not have to refund any of the premiums paid if the insured policyholder cancels their coverage. Most insurance companies will refund the portion of your monthly premium payment if the policy is canceled in the month your payment was received for. The details about policy cancellations would be outlined in the company’s terms of agreement written within the copy of your policy’s documents.

The amount of a cash value refund depends largely on the amount of time the insured has had the life insurance policy. Other factors that could affect the amount of a refund may be penalties and fees due to canceling before the policy has matured if it’s a Term Life insurance or if there is a balance of borrowing against the accrued cash value of the policy. There is a formula used to calculate the cash value amount to be refunded to you.

It would be wise to consider the pros and cons before canceling if you have a Term Life policy. Especially if it’s one you have had for several years. The amount of cash value accumulated is based on the face value of the insurance benefit, interest earned on cash value each year, and the amount of time before maturity. If you are close to reaching the maturity date of the policy you would receive a full refund of the cash value which will equal the policy’s face value at that point.

Answered August 1, 2016 by ronanona

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