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Term life Insurance

Is it right to surrender Term Insurance Plan when you have zero liabilities?

A Term Insurance Plan is purchased with a perspective to cater to some objectives of life like securing your family’s future or paying off your loan. Leaving behind a good corpus for your loved ones is an excellent option to safeguard them financially.

Is it right to surrender Term Insurance Plan when you have zero liabilities? 1

But what you should do if you don’t have any liabilities? Then the question might arise that what you should do with the insurance policy. Surrender the term insurance plan, but how can you do it? Read through the article to know if surrendering the policy is the right option or not.

Surrendering your term insurance plan – is it a right bet?

In simple words, if you don’t have any liabilities like no outstanding loans or no one to take care of, then you might feel that paying hefty premiums is a waste of money. And you might think of surrendering the policy and invest that extra money towards some other lucrative investment avenues.

Well, if you have a pure term insurance plan, then it cannot be surrendered, but those insurance policies with savings or investments component are the only ones which can be surrendered. Therefore, if you are sure that you don’t need a death benefit, then surrendering the policy could be the right option. But if you are looking for long-term protection for your family even in your absence, then the term plan is much needed. Therefore, always keep in mind your responsibilities and then make a decision.

What is the Surrender Value?

Surrender Value is the amount that you get when you exit the policy before the maturity date. In short, the amount received after surrendering a policy is referred to as surrender value. In the case of term insurance plan, it should have an investment or saving element like the Unit Linked Insurance Plan (ULIP) to have a surrender value. You can’t surrender a policy immediately after buying it as every insurance company has defined a period only after which you can surrender it. The set period is based on the policy tenure and the number of years that are completed after purchasing it.

Why should you avoid surrendering your term insurance plan?

    1. Protecting your family – Your family might be monetarily steady right now, equipped for taking care of themselves, yet tomorrow’s circumstances are unpredictable. Due to some uncertainty, your family might become dependent on making a decent living, and thus a budgetary need could emerge. To make sure that the future of your loved ones is financially secured in your absence, you need to support then with an insurance plan which provides great coverage amount in form of death benefit. Such that they can manage and balance their monetary requirements easily.
    2. Shielding Against Health Risks – There is always a risk of getting diagnosed with critical illnesses that might have no connect with lifestyle or family. Treatments for several ailments can drain your entire savings, leaving your family in financial distress. Therefore, in such a scenario, selecting the best term insurance plan would help in taking care of the clinical costs and getting you the correct treatment. 

Concluding all, always look for a larger picture such as your future goals when you think of surrendering your policy. Also do check the kind of term insurance plan you have to be sure whether it is a wise decision to make or not. As it is essential to understand that the term insurance plan is a pure protection plan which does not offer any maturity benefit, so surrendering the same is not recommended. The idea behind the term insurance plan is to financially secure your loved ones in your absence and not having any return benefit. If you want to know more about various clauses in a term plan, then you can visit and get all information about surrendering your policy.

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