Be Cautious When Cancelling Life Insurance

Before canceling a life insurance policy, first determine the annual net cost. To do this, the annual premium should be calculated to understand the buildup in cash value and annual dividends. People sometimes find the policy does not cost as much as they first thought. If you want to know the net cost, ask your agent for an in-force illustration. Never risk lapsing your policy because of nonpayment.

In addition, never cancel your policy before understanding the tax penalties. Asking your agent for a letter about the tax consequences will result in an informed decision. Never buy policies from questionable providers. 

An increasing number of Americans want to sell their life insurance policies to receive cash for retirement expenses and cash for health concerns. These transactions have been called life settlements. In some situations, selling a policy makes sense, but consumers should exercise caution before making a final choice. Many consumers do not realize the money from life settlements can affect an individual's ability to receive public assistance, such as Medicaid. In addition, health information could be shared largely during the application process. You could be signing your privacy away.

Every individual gets insured for a maximum amount. Even if they get more insurance, they will sometimes be stuck paying higher premiums because they are older. 

As Financial Industry Regulatory Authority warns, selling a policy in the life-settlement industry sometimes involves aggressive sales tactics and abuse. Beware of brokers and financial brokers because commissions are sometimes as high as 30 percent, and they can bias the buyer. Financial experts recommend exploring alternative options. David W. Bennett says that individuals who have a cash-value policy and paid their premiums for years should be able to borrow money off it. In addition, this option is tax-free. Plus, you keep the policy alive, and your loved ones still receive money for the expenses you would leave behind.

Call Pachuta Insurance Today @ 706-769-2262
Sources:
Your Houston News
AARP