All Life Insurance Tips

Is there any way around the cancellation fee for whole life insurance?

I have around $4,000 dollars in my whole life insurance policy. A year or so ago, I decided that this type of "investment" is not for me so I stopped funding it. When trying to "cash out" of this policy I discovered that there is a $5,000 surrender fee, which would leave me with nothing. Does anyone know of a way around this, or at least a way to contest it?

Public Comments

1. Unfortunately since you signed the agreement it sticks. You can contest it in court but by the time you pay a lawyer and court cost. It's not worth it ,even if you won. Another example of the big man screwing the little man. And not even a lttle kiss.
2. Policies are contracts. If those are the terms you agreed to when you filled out the application, those are the terms you're stuck with. It still doesn't make sense to keep it, though, if it isn't doing what you want it to - no use throwing good money after bad.
3. Sorry, the surrender charge is included in the contract. Anything in a contract is non-negotiable. Plus you can't stop funding the cash value in your whole life policy. That would mean you have stop paying your premiums. What happens next is that the insurance company will give you a 30 day grace period to pay it. After that, they will take a loan out of your cash value to pay for the premiums and continue to do so until there isn't enough cash value to pay the premiums. You will owe monthly interest on this loan and also the missed premiums if you want to keep this policy. If you die, any missed premiums and unpaid interest will be deducted from the face amount of the policy. Anyway, the whole point is that the cash value doesn't belong to you. It belongs to the insurance company. That's why they penalize you if you cancel the policy or charge interest when you take loans out of it. And when you die, your beneficiaries don't even get the cash value. If you want to invest your money or build savings, you are 100% better off by not keeping it in a life policy. You should open an IRA account and invest into mutual funds.
4. Nope policy's are set in stone. Why did you describe this as an investment? It's permanent life insurance. It'll pay for your funeral.