If I don’t die before the end of my insurance plan do I get any reimbursement?
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financemum
1 year ago
Expert Financial Adviser Answer
Paul Ross DipPFS CII(MP&ER)
answered 1 year ago
If you're talking about a term assurance plan, unfortunately not. Endowment plans do give you a pay back, though, but are poor value
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Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
Life insurance is something that most of us will be all too happy not to claim! Most policies are purely for protection and, as Paul says, have no surrender or maturity value.
Endowment policies are combined life insurance/savings plans, and are not really very good at either. Whole of life policies are designed as insurance policies with an investment element as part of the insurance structure. These plans can build a (very modest) value. Of course, you cannot outlive such a plan, but you may be able to surrender it and put a small sum in your pocket.
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Endowment policies are combined life insurance/savings plans, and are not really very good at either. Whole of life policies are designed as insurance policies with an investment element as part of the insurance structure. These plans can build a (very modest) value. Of course, you cannot outlive such a plan, but you may be able to surrender it and put a small sum in your pocket.
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
To follow on what David has said on whole of life plans, these often have an additional cost when compared to a standard term assurance policy which goes towards creating the investment element that can provide a surrender value.
this is one of the reasons that term cover is cheaper. you will be able to find out what type of policy you have from the initial paperwork you were issued and this will also confirm what happens if you stop payments and if there is any surrender (or cash in) value.
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this is one of the reasons that term cover is cheaper. you will be able to find out what type of policy you have from the initial paperwork you were issued and this will also confirm what happens if you stop payments and if there is any surrender (or cash in) value.
Expert Financial Adviser Answer
John Stirling
answered 1 year ago
Short answer, no.
Long answer; think of pure term insurance (the most common type of life cover, and the cheapest) as a bit like car insurance. If you don't have an accident you don't expect to get any of your premium back.
If you don't make a claim during the policy period (i.e. you survive) then your premiums are being used to help fund claims from those individuals who have died. If you had died and made a claim it would have been long before you paid enough to fund that claim from your premiums, so other insured lives would have been contributing towards your claim with their premiums.
This concept of subsidy is the basis of insurance, and is why we have insurance at all - you are sharing the financial risk of your death amongst all the others who are insured with the same company as you.
This risk is then 'reinsurered' to ensure that there is enough money around to pay claims even if your insurance company doesn't have deep enough pockets for the risk.
It is a complex market, which can effectively just be ignored, because the insurance company is offering a simple guaranteed premium, however the downside is you do not share in the profits of the life fund either, so no payout if your survive.
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Long answer; think of pure term insurance (the most common type of life cover, and the cheapest) as a bit like car insurance. If you don't have an accident you don't expect to get any of your premium back.
If you don't make a claim during the policy period (i.e. you survive) then your premiums are being used to help fund claims from those individuals who have died. If you had died and made a claim it would have been long before you paid enough to fund that claim from your premiums, so other insured lives would have been contributing towards your claim with their premiums.
This concept of subsidy is the basis of insurance, and is why we have insurance at all - you are sharing the financial risk of your death amongst all the others who are insured with the same company as you.
This risk is then 'reinsurered' to ensure that there is enough money around to pay claims even if your insurance company doesn't have deep enough pockets for the risk.
It is a complex market, which can effectively just be ignored, because the insurance company is offering a simple guaranteed premium, however the downside is you do not share in the profits of the life fund either, so no payout if your survive.
