Can you buy out a term life insurance policy?

Surrendering a term life insurance policy means you stop it and get back the premiums you've paid up to that point. Important to know, is that buying out a term life insurance policy works in different ways, depending on what type of term life insurance policy you have purchased.

1. Standard term life insurance

With standard term life insurance, you get paid the amount you have insured anyway, if you die within the predetermined period. With this form, you do not build up any capital. This means that you can end your term life insurance, but you cannot buy it out.

2. Capital life insurance

With this type of death risk insurance, you as the policyholder do build up capital and a predetermined insured amount is paid out on a predetermined date. This means that you can buy out this type of insurance.

Have you had capital whole life insurance for a number of years? Then you will probably get a piece of your money back. However, keep in mind that the amount refunded will always be less than the premiums already paid!

3. Purchasing a mixed term life insurance policy.

Finally, there is also mixed term life insurance, which is basically a combination of the first two. Here you make clear agreements with your insurer about the amount of the benefit and the date when your dependents will receive it.

It is indeed possible to buy off a blended term life insurance policy, but you lose the piece of the policy that relates to the standard term life insurance policy either way.

There are several reasons to buy out death benefit insurance, as you'll see below:

1. You are looking for an insurer with better terms and conditions

Your current insurer' s terms and conditions may not meet your expectations, such as the minimum duration of the term life insurance policy.

2. You no longer need mortality insurance.

If you have almost paid off your mortgage, you may no longer need death benefit insurance and want to buy it out.

3. You want a cheaper solution

Finally, you may find a term life insurance policy with a cheaper premium and save money in the long run.

When buying out life insurance, there are certain things it's best to pay attention to. Here's a clear overview:

1. Pay attention to the policy conditions

Always research the terms of your insurance before buying it off. After all, in some cases it is not even possible or there are specific requirements.

2. The amount of the surrender value varies

In addition, the amount of the surrender value of your life insurance (the value you get back) will depend on the value you have already built up over the years. The more premium you have already paid, the higher that amount. With an insurance policy that has been in place for less than 5 years, you will usually get back only a small amount.