When it comes to providing a good financial safety net to your family in times of emergencies, it is wise to invest in a robust insurance policy. Opting for a life insurance policy is one of the better options to protect your loved ones from life risks. However, there are instances wherein policyholders tend to surrender their policy during its tenure. While there could be different reasons behind this, they tend to overlook the benefits that they let go. As a policyholder, it is beneficial to keep in mind the advantages of this policy. Read on to know more as to why you should not cancel your life insurance.
What is life insurance?
A life insurance policy is a type of policy in which the insurer will compensate the family of the policyholder in the event of their sudden demise during the policy term. The compensation amount given by the insurer is based on the type of plan purchased by the policyholder. This amount will help the dependents in managing daily and vital expenses while planning a financially secure future for themselves.
Why shouldn’t you cancel your policy?
Listed below are reasons as to why you should stay invest in your policy:
1.Your money would be wasted
It is no secret that investing in a life insurance policy costs money. Depending on when you start investing in it, the costs would differ. As different plans have different benefits, the money that you pay for one type of life insurance could be less compared to the other. However, no matter what the cost of the plan, you are investing your hard-earned money in it. If you surrender your plan during its tenure, you not only end up losing their benefits, but also your money. Moreover, you will not get any maturity benefits as the plan hasn’t matured before being withdrawn.
2. Takes care of your debts
The coverage amount in a life insurance is sufficient enough to help your loved ones manage their day-to-day expenses. However, the amount can also help in taking care of any outstanding loans or debts that you have incurred. After the policyholder, the responsibility of clearing debts and loans falls on their family. They could face problems in trying to clear huge amounts. In such situations, having a life insurance policy can be beneficial as the family of the policyholder will not have to worry about financial uncertainty when it comes to paying-off these debts.
3. New policy would cost more
It is always recommended to buy a policy early on in life. This is mainly because as we age, our body goes through major changes. These changes do not just impact us on a daily basis, they also impact the cost of the life insurance we buy. If you buy life insurance while you are young, the cost will be much lower compared to when you buy it at a later stage of life.
For example, the life insurance that you buy at the age of 27 will be a lot cheaper than compared to when you buy it at the age of 42. This is because of the changes that you have undergone physically. As the insurer will forced to underwrite a higher risk for an older person, they will charge more. So, it is better to stick with your existing policy rather than having second thoughts in the future and purchasing another plan at a higher cost.
4. Riders would be lost
When you include add-ons in your life insurance policy, you are enhancing its coverage. Even though they increase the cost of your policy, they also assistance in medical emergencies, especially, for those who have pre-existing medical conditions, or could face the risk of a critical illness. In such situations, your life insurance policy could come in handy.
5. Surrender charges could reduce your compensation
When you surrender your policy, your insurer will apply surrender charges which could be deducted from the sum assured. If there are premiums that were not paid, they could also be deducted from the sum assured before it is paid to you. So, you could end up with the sum assured after the certain deductions.
These are some of the reasons as to why you should stay invested in your insurance policy. If you are looking to purchase one for yourself, you can use the life insurance calculator to evaluate the cost of your policy and the cover you would need.