Life insurance is one of those essential policies that all adults should have. While it may not be one of the nicest topics to research, it is something that is incredibly important to ensure that your family is left well cared for in the event that something should happen to you. There are lots of life insurance policies out there, each offering different levels of cover, depending on your needs, that cash out after death and leave money to the named beneficiaries. However, a question we often come across is ‘can I cash in on my life insurance?’ The experts here at WIS Business Protection are on hand to help with the answers you want.
Can I cash in a life insurance policy?
Unfortunately, you are no longer able to withdraw any money paid into life insurance policies here in the UK. This means that should you surrender a policy at any time, it will have no cash value. Previously, you were able to withdraw premiums that had been paid into certain policy types, but these endowment policies are no longer available. Due to this, cashing in your policy and withdrawing your money is not an option.
What was an endowment life insurance policy?
Prior to them being scrapped, endowment policies were the only way to have a life insurance policy with a cash value attached to it that you could tap into prior to death. Instead of a traditional insurance policy where you just make your monthly premiums for your cover, endowments were a hybrid of life insurance policy and investment savings account. As well as peace of mind for you that your loved ones would be cared for in the event of your death, it also acted as a savings plan for your future, which made it the more flexible option. However, as with any type of investment, there is always a risk with your money, so although it was more flexible and allowed you to access your money, it wasn’t the most secure of life insurance plans to ensure you are leaving a fixed lump sum behind.
What happens if I cancel my life insurance policy?
Since there is no cash value against your life insurance, you will not receive any money in the event that you cancel your policy. All policies have a cooling-off period, often between 14 and 30 days, in which time you have the right to cancel and receive a full refund of anything you have paid in. Be sure to thoroughly check the details of your policy when you sign up, as once this initial period is over, you are no longer eligible to withdraw any premiums that you have paid in.
This means that although you can cancel your policy, your premiums won’t be refunded, and you won’t be able to make a claim. This is why it’s important to think of your life insurance as a safety net, rather than a savings pot.
Withdrawing money from a life insurance policy
Money cannot be withdrawn from a UK life insurance policy and is only available upon the death of the policyholder. In this event, the named beneficiaries do not receive the pay out automatically but would have to submit a claim to the insurance company. The beneficiary will need to make sure they have the relevant details, including the policy holder’s name, date and cause of death, a copy of the death certificate and the policy number, and can hope to receive the pay out within 60 days, although this can vary.
The expert team here at WIS Business Protection are on hand to help you with all of your life insurance questions. As an independent firm, we have access to the whole UK insurance market. This gives us inside knowledge of the best policies and ensures that we are always able to find a policy to suit your needs and your budget. If you have questions on your current life insurance policy or are thinking of switching to a new one, feel free to get in touch with our friendly team today.