I found a better life insurance policy than the one I currently have. Can I get any of my money back from the first policy?
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Asked April 26, 2015
More often than not, it is more economical to keep a life insurance policy in force than to give it up. Depending on the type of policy, you may be entitled to some of the money you have paid into the policy, but you will not be able to get a full refund from any type.
If the policy is for term life insurance, you may not be able to get any return on the investment. If you have paid premiums in advance, you will be entitled to a refund of the prepaid portion of the premiums, but cannot reclaim any portion you paid for coverage prior to the cancellation.
If the policy has a cash value, you are entitled to the cash value portion of the policy and any prepaid premiums, but you will also have to pay penalties and early termination fees. Any previous premiums you have paid into the account are considered void, so a policy you have held for several years would be a major financial loss.
Talk to your insurance company about upgrading the policy to what you need. Life insurance is meant to protect the future and insurance companies understand that your needs change over time. Many companies have provisions that allow you to make changes to the policy based on life events such as marriage, having children, or even getting a job promotion. If this option is available to you, it may be your best chance to retain a majority of the life insurance investment you have already made.
The only way to get your full paid amount back is if the policy is canceled within the first 30 days of being written. Most insurance companies have provisions for people deciding they didn't need a policy after buying it, and will refund all but a small handling charge.
Answered April 28, 2015 by Anonymous