What should you consider before surrendering the Insurance Policy?

All About surrendering the insurance policy

Are you thinking to get an insurance policy? Before getting it, you should ensure that it suits you and your family. A protection strategy is an agreement between the policyholder and the safety net provider. There are numerous banks and money related organizations that give protection arrangements. These approaches contrast from individual to individual. You need to settle on a decision that suits you appropriately. Here are some points that you should consider before yielding an insurance policy.

Affordability issue

Most of the policyholders terminate the insurance policy and think that they have taken the wrong plan. One of the reasons for the surrendering policy may be poor return or high premium. So it is very important to go through the details of the products for which you are going to opt.

Disappointment on returns

This is another prime reason that some policyholders give up the policy before the end because while applying for a policy they think they would get a good return of their investment made but at last, the result comes something else. If you are doubtful that your policy is not good then you can surrender it or convert it into a paid-up policy.

Don’t forget the surrender value

As per the policy rules, if you terminate the policy you will be entitled to 30% of the premium you made. After 1st October, the surrender value of policies terminated between the fourth and seventh month will be entitled to 50% of the premium.

Think about portfolio

Returns and premium do not always matter suitability, manageability is also important to a great extent. If it does not seem to be good with your policy then you can terminate it and take a hit instead of spending money, energy, and time to maintain a long-term policy. But if your policy already has completed its tenure then there is no need to terminate it.

Trap

An important thing to know that the lock-in period for the insurance plan is now five years. It means that if you terminate your policy after three years you will get surrender value after five years only. The person who terminates the policy after 3rd year will have to pay a premium for five years.

Analyze options before giving up the policy

It is not always good to terminate the policy if it does not give you good returns. The amount you save from payable premium will invest in some other remunerative tackles.

Boost your protection

Each person has different needs and these vary according to financial situations. There are a lot of factors to consider; the main goal of life insurance policy is to safeguard your family in case of your death.

You can opt for insurance plans after terminating the unnecessary plan from your portfolio. The term insurance will cover the risk of your death only for a term of your plan. In this plan, you have to pay a premium year after year, and if you die before your policy tenure period, your whole insurance income is given to your family. The premium charged on the term plan is less than other forms of life insurance plans as it covers life risk.

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