What Happens When You Prematurely Terminate Your Insurance Policy?
This article published presents a better-valued alternative to surrendering your insurance policy. It answers the frequently asked questions faced by policyholders. Also, a few reasons have been briefly pointing out as to why they are selling their endowment plan as well. Read it to prepare you if the above choice is your decision too.
Read this article before you decide to terminate your insurance policy. Understand what you are getting yourself into and the options available.
We all understand that insurance policies are a foundational building block of financial freedom. They protect against unforeseen situations, and also offer a form of savings and investment for most. But there are times in which you find you can’t upkeep the payments for your insurance policies. This could be due to debt — personal or business debt, incurred due to being retrenched, or the failure of a business. Or serious health issues that call for immediate medical attention, and prevent you from resuming regular work. In these situations, many will consider terminating their insurance policies, in order to alleviate the burden. In some cases, you might get some cash back too, as part of the surrender value. But is this worth it? How to figure out your policy’s surrender value
If you surrender your policy to the insurance company before maturity, you will receive a sum of money, known as the surrender value. There are two types: the guaranteed value and the non-guaranteed value, depending on the type of endowment policy you have, participating (par policies) and non-participating (non-par policies). This table illustrates how the bonuses work along with the type of policy structure: As you can see, the early termination of your policy will return you an amount that is less than the total amount that you have paid over the years. Selling your policy to a broker
One option to consider are third-party vendors who are willing to buy over your policy, and give you a sum that’s higher than your surrender value. REPs Holdings, one such broker, answered these FAQs: Q: Is it legal to sell your policy? A: It is legal to sell your policy to a third party and this is done through a legal transfer of ownership from one party to another. Q: Is your company regulated by MAS? A: No, REPs Holdings is not regulated by MAS as we are not required to be regulated, but the transfer process of policy ownership is. Q: Can I still make a claim after? A: No. Once you have sold your policy, you have already forfeited your rights to make claims. All rights will be transferred to the vendor. Q: What kind of policies do you take in and how long does the process take? A: REPs Holdings takes in endowment and whole life policies. It will take about 20 minutes for us to settle the documents over the insurers’ customer service counters.
REPs Holdings (REPs Holdings Pte Ltd) is not licensed, approved, registered, or otherwise regulated by the Monetary Authority of Singapore or any other applicable regulator in Singapore or otherwise in respect of any of its activities, nor does it hold itself out as being so licensed, approved, registered or otherwise regulated. REPs Holdings does not hold itself out to be carrying on any activities which would require them to be so licensed, approved, registered, or otherwise regulated (including but not limited to regulated activities under the Securities and Futures Act (Cap.289) and financial advisory services under the Financial Advisors Act (Cap.110) of Singapore).
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