Protect the family. Saving to make a lifelong dream come true. Or increase the income. There are many good reasons to take out life insurance. And sometimes there is a good reason to dissolve it too. For example, the money saved is used to buy a house.
In any case, you must think carefully before terminating your life insurance. This usually leads to a financial disadvantage and the full amount is not repaid. Here we have summarized the most important points for you.
What is the surrender value of life insurance?
The surrender value is the amount that is repaid to you upon the termination of the life insurance. In the first few years after taking out the policy, the reimbursed amount is generally still very low or even zero.
Compared to the amount you have paid, the loss is therefore relatively high. The surrender value of life insurance increases with the length of the contract. In addition, the agreed risk coverage also affects the amount of the surrender value.
GOOD TO KNOW
This only applies to funded life insurance. Pure risk life insurance generally has no ransom value.
When can life insurance be canceled?
You have found the home of your dreams. But unfortunately, you don’t have the necessary equity capital. Or your life situation suddenly changes and you find yourself in financial trouble.
When it comes to terminating life insurance, a lot depends on whether you have taken out life insurance under pillar 3a or 3b. In pillar in certain cases is it possible to dispose of the capital before the policy expires. In pillar the other hand, no particular reason is needed to terminate life insurance: there is therefore flexibility.
Early termination almost always leads to high losses. For this reason, think carefully before taking this step.
And how is the surrender value calculated?
In the typically funded life insurance, the simplified calculation is as follows:
savings capital
+ accumulated surpluses
– cancellation costs
= surrender value
Most life insurances still have no surrender value shortly after being signed. This is due to the fact that the costs must first be amortized. Only after the payment of three annual premiums is there a guaranteed surrender value in any case.
GOOD TO KNOW
In the’ fund-linked life insurance, the surrender value corresponds to the present value of the investment in funds, less the unamortized costs.
What cancellation do terms apply?
The termination period, monthly or yearly, depends on the contract. The deadlines vary depending on the policy and the insurance company. We will be happy to discuss this with you. Perhaps we can even find another solution that allows you not to cancel your insurance.
Canceling life insurance – yes or no?
If you cancel life insurance, you will almost always have a financial loss. For this reason, it is a step that must be carefully considered. Also, consider that both your interests and your health could deteriorate. If you subsequently decide to take out new life insurance, you may have to pay a higher premium or even be rejected.
If you nevertheless wish to terminate your life insurance in whole or in part, please speak to us. We would be happy to inform you of the current surrender value of the insurance without obligation. This way you won’t have any nasty surprises.