Principal, LifeNet Insurance Solutions, Redmond, WA
As a general rule there is no cash accumulation in term life insurance and so there is nothing to cash in. The one exception to this is so-called ROP or "return of premium" coverage which is still available with some carriers. This coverage however is heavily weighted with a front end load so that most cash would only be available in the last years of the policy.
Term life insurance is not known to be a cash accumulating life plan so there is nothing to cash in. It is a temporary plan that is "rented" for a specific period of time. Only the cash value type insurance plans can be cashed in after a certain time period. Those most common are whole life, universal life, indexed universal life and variable life.
No. Term insurance is exactly what its name implies, you a buying protection (some might say renting it) against the possibility of death occurring during a specified period of time. Term Life Insurance is the least expensive form of life insurance because of its defined duration and because it does not contain any cash build up provisions. Some life insurance companies "enhance" their term life products with an option called "Return of Premium" but the policyholder pays extra premium above and beyond the cost of the basic term life insurance policy for this privilege. Essentially you are loaning the insurance company your money interest free for them to invest for 10, 20 or 30 years while simply returning the original money you paid in at the end of the policy's term. I won't argue whether this is a good or a bad investment of money, many people are lousy savers so this approach would give them some money at some future date. However, if you look at the price difference between a pure term life policy and a term life policy with the same death benefit amount and the Return of Premium feature and you invested that difference in a mutual fund or the stock market over the same time frames I suspect the vast majority of people would end up with more money by going down the investment route.
You should definitely discuss this with a financial planner or other impartial advisor before making the decision to purchase term life insurance with or without the return of premium option. As an insurance sales person, I definitely believe in the value of life insurance, both term and permanent. But the commissions earned are higher when we sell you a term life policy with the return of premium provision simply because the premiums are higher. If your agent doesn't at least touch on these issues with you, perhaps you should visit with another life insurance agent.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Term life insurance does not build cash value so there is nothing to cash in - only permanent insurance policies build cash value (universal life and whole life). When you terminate a term insurance policy, the coverage ends and you get nothing back.
However, if you have a term policy with a Return of Premium rider, you may get a percentage of premiums back after a certain amount of time has passed - read the language inside of your policy for specifics if you bought this rider when you set up the policy.
I hope the information is helpful - please feel free to contact me for help with your coverage and if you have any other questions. Thanks very much.
That is a great question! I would love to tell you that your term policy can be cashed in, but because of the way your policy is structured, there is no cash in it to receive. Term policies are as cheap as they are because the premium that you pay is designed to only cover the cost of the insurance, and nothing else. Whole life policies include a cash value aspect, and that is part of the reason they are more expensive. I hope that helps, thanks for asking!
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Most term policies do not have cash value. However, some do. Check with either your agent or the insurance company to determine if there is any cash value available. However, do not surrender any policy if there is any reason to keep it. Life insurance will never be cheaper and your health may make securing another life insurance policy impossible.
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You should definitely discuss this with a financial planner or other impartial advisor before making the decision to purchase term life insurance with or without the return of premium option. As an insurance sales person, I definitely believe in the value of life insurance, both term and permanent. But the commissions earned are higher when we sell you a term life policy with the return of premium provision simply because the premiums are higher. If your agent doesn't at least touch on these issues with you, perhaps you should visit with another life insurance agent.
However, if you have a term policy with a Return of Premium rider, you may get a percentage of premiums back after a certain amount of time has passed - read the language inside of your policy for specifics if you bought this rider when you set up the policy.
I hope the information is helpful - please feel free to contact me for help with your coverage and if you have any other questions. Thanks very much.