There is no cash surrender value to a Term Life insurance policy. Permanent policies (Whole and Universal Life) are the type of policies that have cash value. Term insurance usually costs less because the premium all goes to the death benefit, and not to the build up of cash value.
That is a great question, and I really wish that I had as good an answer to give you! Term policies are cheap, because they offer very little besides the cost of the insurance. There is no cash accumulation in a term policy, so unfortunately there is nothing to surrender to you if you end the policy. If you decide to cancel the policy the only thing that you will get from doing so is no more payments to make. It ends as if it never existed. The only way there would be a chance to get anything back was if you had paid to put a return of premium rider on the policy, and even then generally you have to ride the policy to it's term date to see any of that back. I hate to be the bearer of bad news, but I am glad that you asked. Thanks!
Term life insurance only value is a specific death benefit to the designated beneficiary. Because term life is like "renting" life insurance there is no cash value accumulating like in a whole life or universal life insurance policy. Therefore without a cash value to build there can be no surrender value. When cancelling a term policy the coverage just ends.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Permanent insurance develops cash value so that the face amount of the policy will be available for as long as possible up until death. The actual cost of providing insurance on an 80 year old for example would be very high and if the person lived to 82, it would be much higher still. A term policy doesn’t cover a person at those ages under most circumstances and as a result there isn’t any need for it to develop cash value.
In Canada, most term life insurance policies do not have a cash surrender value. Some policies notably policies with such as 20 or 30 year term may have a cash surrender value or reduced paid up value. Typically 5 and 10 year renewable term policies usually do not have any cash surrender or paid up value.
The mechanics of this are that in order to keep the premium level you are paying more than the actual "risk" in the early years and the additional premium is used to keep the "risk" to the insurance company level. If the longer term policies offer anything they are more likely to offer a paid up value than a cash value. Check your policy or check with your insurance broker to be certain.
If you have further questions, please do not hesitate to contact me or visit my website JPW.ca for information.
.JPG){kind=avatar}
The mechanics of this are that in order to keep the premium level you are paying more than the actual "risk" in the early years and the additional premium is used to keep the "risk" to the insurance company level. If the longer term policies offer anything they are more likely to offer a paid up value than a cash value. Check your policy or check with your insurance broker to be certain.
If you have further questions, please do not hesitate to contact me or visit my website JPW.ca for information.