Jayson Lowe answers whether a policyholder can cancel a high cash value life insurance contract and get their money back. He states policyowners have the contractual authority to forfeit or surrender the contract and that the insurer will return the total cash surrender value (which he says rises daily from policy inception). He strongly advises against surrendering such policies, recommending consulting the placing advisor or an experienced advisor, and shares a personal anecdote about his late father surrendering a participating whole life policy and thereby losing a death benefit when it was needed.
Questions this video answers
According to the speaker: 'There are no surrender charges.'
According to the speaker: 'The total cash surrender value rises daily from the inception of the policy.'
Chapters
Can you cancel a high cash value life insurance contract and get your money back? The answer is absolutely so. The one thing about being a policy owner of a high cash value life insurance contract is that you maintain the contractual authority from day one to forfeit or surrender that contract. There are no surrender charges. What the insurance company will do in that circumstance is they will return to you the total cash surrender value of the policy. And that total cash surrender value rises daily from the inception of the policy. And so, rather than contemplate forfeiting or surrendering a policy, it is always best advised to get together with either the advisor who placed the contract for you, or an experienced and proficient advisor who can help you navigate the myriad of options to keep that policy in force. My late father had a participating whole life insurance contract, and when he retired, there was a sum of cash value that had accumulated inside the policy. And his advisor at that time suggested that he surrender it so he could get the cash value and enjoy or supplement his retirement. I'm going to meet that individual someday. We're going to have words, because I would have never, and I will never ever recommend that somebody do that. My father could have borrowed against that accumulation on demand, on his terms, to achieve the things financially that he wanted to achieve, while still maintaining an ever increasing permanent death benefit. But rather what happened when he died suddenly and unexpectedly. There was no death benefit windfall which would have shown up for us exactly when it was needed the most. There was no cash value, there was no contract because he was ill advised to surrender it. So while you're given the contractual authority to do something like forfeit or surrender, you should always consult either your advisor, or if you can't reach him or her, get in touch with someone, like someone on our team, who knows what they're doing and who can walk you through the options to maintain it, to keep it in force, which is exactly what it should be, is in force.
