I have been working on cashing out my life insurance policy. The policy is one that I got years ago. Since then, my husband and I each got new life insurance policies that are better suited for our current needs. As such, I have been going through the process of cashing out the older life insurance policy.
First, after weighing many different factors, I made the decision to cancel out my life insurance policy. Second, I spoke with a representative of my insurance company who asked me a lot of questions. At that time, I was told that they were going to mail a form out to me. I would need to fill out that form, and send it back to my insurance company, before they could cancel my insurance policy. That very important form arrived in the mail today.
It turns out that the form comes with a two page letter. At the top of the letter, in bold print, and in all caps, it says: “Important – Please read before surrendering your life policy”. There is something ominous about finding the phrase “surrendering your life” on an official looking form. Perhaps the words were chosen specifically because they wanted people to feel uncomfortable about canceling a life insurance policy.
The letter reminds me, once again, that a decision to “surrender” a life insurance policy should be well thought out. What follows are a series of questions designed to make me hesitate. The letter points out that “a number of benefits may be lost” if I follow through with what I want to do.
I am reminded that my family would be depending on the money that comes from my life insurance policy, in case I died. It advises I wait until a new life insurance policy has taken effect, before canceling this one. The letter reminds me that the money I would get from cashing out the policy will be subject to income tax, which will reduce the amount somewhat.
It casually suggests that perhaps what I really want to do is take out a loan with them, instead of canceling this policy. Would I like to update the coverage in this policy to something better? I am warned that if I cancel this life insurance policy, and then, later, decide to get another one, that my premiums will be much higher. I am urged to give the insurance company a call, so I can explore my options. The letter ends with: “P.S. : Remember, surrender may not be the only option you have.” All of this appears before I can even get to the form that I need to fill out.
Yes, one should carefully consider options before canceling a life insurance policy. I’ve already taken the time to do that, however, so this feels like I am being pressured to change my mind. I will be filling out the form, as soon as I can dig it out from under all the unwanted “advice”.
Image by Stefano Brivio on Flickr