Pros & Cons of Surrendering a Life Insurance Policy : Insurance Answers

Hi, I'm Dave Boyke from Retirement Resources. Today we're going to talk about the pros and cons of surrendering a life insurance policy. Maybe the most important part of this question is, do you need the coverage to begin with? Folks, if you need the life insurance coverage, to surrender a policy means that you're going to cancel that coverage that you bought at a specific age and you're going to, if it's a cash value policy, possibly get back a refund that will put a few dollars back in your pocket today. Unfortunately, if you ever feel you need that life insurance again, you're going to purchase it at an older age. So before you surrender a policy to get money out, look at options of, is there a possibility that you could borrow from the policy or use the policy as collateral? You want to see whether or not it is a term type insurance policy. It may not have any current value to it. So the pro, of course, in surrendering a policy is you don't need to pay any more premiums because you don't have any coverage and you may get some money back that you paid in over the years. The big disadvantage, though, folks, is that you are giving up coverage that you purchased at a younger age and at a lower cost. And if you truly do need coverage, you'll have to buy it again at an older age at a higher cost. So make sure before you cancel that policy that you are clear in your overall financial planning that you don't need and won't need to carry this coverage on throughout the years going forward. Again, find a trusted financial advisor that's got an insurance background and sit down with that individual and discuss your overall financial decision before you make a decision to cancel any existing life insurance coverage. That's my suggestion. Thank you for joining us today. I'm Dave Boyke from Retirement Resources.