Do I Get My Money Back If I Cancel My Universal Life Insurance?

When one has made up his mind to cancel his Universal Life Insurance Policy, the question, of course, arises in the minds of so many Canadians: will I get any money back? This usually comes to many questions, given the flexibility and savings entailed in this kind of insurance. In this blog post, we will look at the way in which the Universal Life Insurance Cost is going to impact what you might reasonably expect to be paid back, along with looking at how obtaining a Universal Life Insurance Quote Online can impact your way of making decisions.

Understanding Universal Life Insurance

Universal Life Insurance is a unisex permanent life insurance policy that provides lifetime coverage under a contract containing an investment feature. What sets it apart from the rest of the other policies, such as term, whole life, or universal life policies? Some of the premium goes towards the insurance, and some of it accumulates in the savings account with the rate of interest credited or based on the performance of the selected investment options of your choice.

Find Out: What Are The Benefits Of Universal Life Insurance In Canada?

Initial Costs and Considerations

When you first pay into a Universal Life Insurance policy, your premium is made up of the accumulated administrative costs together with the insurance charge. Some of the initial costs can be quite large, and the cash value under the policy starts accumulating important sums several years have elapsed into the policy. Such is an essential factor of concern, particularly when trying to compare Universal Life Insurance Quotes Online. Both the policy and the timing of the potential cancellation can have impacts on the decision regarding the structure of these costs.

Find Out: How Long To Pay Premiums For Universal Life Insurance?

What Happens When You Cancel?

When you cancel a Universal Life Insurance policy, you are backing out of the agreement with your insurance company. Upon cancellation, you get the accumulated cash value of the policy, not an amount minus any surrender charges and outstanding policy loans. 

Cash Value: It denotes the amount of your premium, which has been invested and grown over time. The cash value amount truly depends hugely on the policy duration and the good performance of the investment part. 

Surrender Charges: These are penalties the insurance company charges you in case, you are making a cancellation of a policy within a specified period; normally, it's within the first 10 to 20 years of the policy. In the first few years, the cash value can see these charges consume much of it. 

Policy Loans: Any loans taken against the cash value of your policy will be set off from the liability of the cash value at the time of surrender.

The Impact of Universal Life Insurance Cost

Universal Life Insurance, however, will again depend on a variety of factors, including age, health, and the amount of coverage you buy. It will also depend on how well you're doing with the investment part of the policy. Premiums are flexible: one can add over the minimum premium at will to increase the cash value of the policy faster. However, what this basically means is if you cancel your policy, the amount of money you get back will largely depend on how much you have contributed above the cost of insurance.

Find Out: What Are The Two Main Charges Deducted Monthly From A Universal Life Insurance Policy?

Getting Universal Life Insurance Quotes Online

Today, many Canadians head to the web in search of Universal Life Insurance Quotes. It is way more convenient than comparing them to each other, always with the ultimate aim of understanding the future values of your policy's cash value, including projections of how much you will receive if someday down the road you cancel.

Real-Life Scenarios

Just consider the example of Emily, a 45-year-old woman from Toronto who purchased a Universal Life Insurance policy ten years ago. After overpaying high premiums for ten years, which were supposed to increase the investment value, she decided to surrender the policy as her financial situation had changed. Well, Emily had been somewhat taken aback by the high surrender charges. After all, she did end up getting a sizable percentage of the cash value that had accrued within her policy. There is the case of Mark from Vancouver, who canceled his policy only five years after registration. Mark has returned with a much smaller amount, but in fact, he returned with very little cash value accumulation since he had just started savings a few months before surrendering the policy, and the surrender charges were high.

Concluding Words

As to whether one would decide to cancel their Universal Life Insurance policy in Canada, it really comes down to determining whether the amount you may get back justifies the cost of Universal Life Insurance and that would be based on when you're canceling and the structure of your particular policy. There should be full disclosure of cancellation implications, and a financial advisor contacted before making any decision based on the most current Universal Life Insurance Quotes Online. However, the right decision is relative to your financial situation and the particular state in your life. Always remember that each policyholder has different experiences, so take each aspect into careful consideration to make the most informed choice.