Outlook Money
Certain life challenges may prompt you to turn to surrendering your life insurances for immediate money, but is it the right choice to make?
Life insurance is a safety net your family can fall back on if something happens to you. Mortgages, education, and other lifestyle requirements can be taken care of with this amount.
More than the person applying for insurance, the dependents of the said person benefit more from this. This is a life cover that helps your family if you have an untimely demise.
In case, you wish to surrender the Life Insurance in your name due to any financial or life challenge, you can do so and get the accumulated sum. This seems convenient but it comes with its downsides.
Surrendering a policy requires policyholders to pay penalties.
Surrendering also results in the loss of death benefits, which your dependents need.
Be sure that your finances actually require you to resort to this option.
Check how the surrendering can affect your future financial goals, and whether they can actually make your present situation better?
This process also triggers specific tax consequences which you might need to look into and discuss as well before you initiate this process.
Life insurance functions as a financial promise to you and your loved ones. It is a barrier between them and hardships.