Should I Surrender My Term Insurance Policy?

The simple answer to this question is no. After the 2020 pandemic, several families have realized the effects of the unfortunate death of their earning members the hard way. This serves as a reality check for us to consider the sheer importance of term life insurance and how it can help us financially navigate the uncertainties of human life. 

So, if you are thinking, should I surrender my term policy, let us give you a comprehensive idea of why you should not. 

Keep reading!

No, surrendering a term insurance plan is never a good idea. When you do so, you lose the life coverage offered by the policy and are not liable to receive any financial support in case of an unfortunate mishap in the future.

Now, if you are considering surrendering your term plan to reduce pressure on your finances, it will end up disrupting your long-term savings. This is because, as you age, your health stats decline and the mortality rate increases, which tends to shoot up the premium amount.

Thus, you not only lose the maturity benefit for the policy for which you have already paid the premiums but also have to pay more to avail yourself of a term plan in the future.

When you are wondering whether to surrender your term policy, consider for a moment why you purchased it in the first place. Term plans are some of the most pocket-friendly insurance policies in the market, offering high coverage at low premium amounts. 

They provide a death benefit, enabling your family to have financial support in case of your unfortunate demise. Also, these policies come with riders like Accidental Death Benefits Rider, Critical Illness Rider, Accidental Total and Permanent Disability Rider, etc., that enable you to get financial coverage in case of a life-threatening disease or a life-altering accident.

Here is a quick recap of the consequences you have to face in case you discontinue your term insurance plan:

• Immediate loss of life coverage.
• Significant increase in the premium amount in case you avail of another term policy in the future.
• For any medical condition before applying for the second policy, the insurer may not be able to provide adequate coverage.
• Loss of coverage for critical ailments and life-altering accidents.
• No additional tax benefits.

You can also consider surrendering your term policy regarding using the plan if you survive the policy tenure. In this regard, you can opt for a return of premium add-on to get the total premiums you paid as a survival benefit.