Buying insurance is a long-term commitment as your agent will remind you. And it can be painful to see your bank balance drop after each deduction for
your insurance premium. What more if you are facing financial difficulties or have entered into retirement.
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What do you do if you can no longer make payment for insurance premiums?
It can be tempting to surrender your policy but it will mean losing the protection and loss of premiums paid since the policy came into place since the surrender value is typically a huge discount to what was paid, not even factoring the interest your money could have earned over time.
Well, there is an alternative – to sell your insurance to a third party.
What happens when you sell your insurance policy?
When you sell your insurance to a third party, the policy is not terminated but someone else will take over paying the premiums and have the choice to select who receives the payout. It also means loss of insurance coverage for you.
While some may feel queasy that a stranger may benefit on one’s death in the instance of a life policy, selling your insurance will fetch you a higher price than surrendering your policy.
What policies can be sold?
Typically, endowment and whole life policies by Singapore life insurance companies.
Is it safe to sell?
While the trading of policies is not regulated by the Monetary Authority of Singapore, sale of insurance policy is not new. It also exists in other markets such as the US, UK, etc.
In the event that the seller or investor has any grievance, they can take action against the company under the Consumer Protection (Fair Trading) Act.
What is the process for selling my insurance?
There are a number of third party vendors in the market. You will need to provide a copy of your insurance policy, with details such as plan name, start and maturity date, premium, premium frequency, sum assured, surrender value, etc.
Typically, a quotation can be given within 3 working days.
If you are agreeable to the quote, the third party will arrange for the submission of documents to the insurance company and upon submission of documents and confirmation of policy transfer, a cheque will be issued to you.
Surrender insurance plan is costly, it is a decision that should not be taken lightly. Do consider it carefully. Talk to us to learn more about your options. Insurance companies may not give you the best price for surrendering your plan, hence you may want to get a higher price for getting cash from an irrevocable assignment of your policy, in other words, to sell your policy to investors who are willing to pay you more than what insurance companies are willing to pay you for surrendering the insurance.
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At a time of distress or before the distress comes, you may also want to quickly review your existing home loan for refinancing to lower cost so as to ease you through a difficult time.