“I see a cash value, net cash value and net death benefit on their account through their insurer’s website”: Can my parents cancel their life insurance policy after 10-20 years and receive a payout?

Hi Money Minder,

Hey there! I need your help with something. I checked out my parents’ insurance account online and saw a cash value of #, net cash value of #, and net death benefit of #. Which one tells me how much they’ll get if they cancel the policy? By the way, it’s a life paid-up at Age 100 plan.

Oh, and just to clarify, this is all for my parents. They’re thinking about canceling their current life insurance policy after having it for 10-20 years. They just want to know how much they’ll get back. Any insights would be awesome! Thanks!

Sincerely,

Future Financial Guru

Response from THE MONEY MINDER:

"Hello There,"

I understand your concern and the need for clarity regarding your parents’ life insurance policy. Firstly, I want to commend you for taking the initiative to seek information on their behalf. It’s essential to be fully informed when it comes to financial matters.

In response to your query, the cash value, net cash value, and net death benefit listed on the insurer’s website are crucial factors to consider. The amount your parents would receive if they were to cancel the plan is typically determined by the cash surrender value. This value represents the amount of money the insurance company will pay out if the policy is canceled before reaching maturity.

Since the policy is a life paid-up at Age 100, it’s important to evaluate how long your parents have had the policy. Generally, policies that have been held for a longer duration tend to have accrued more cash value. Considering your parents have had the policy for over 10-20 years, they may be entitled to a significant surrender value, but it’s vital to confirm this with their insurer.

I recommend reaching out directly to the insurance company or their financial advisor to inquire about the surrender value and the process for canceling the policy. It’s crucial to have a detailed understanding of the financial implications associated with canceling the policy to make an informed decision. Your parents may also want to explore alternative options, such as using the cash value to fund a new policy or accessing any available benefits while keeping the policy in force.

Please ensure to gather all relevant information and carefully weigh the pros and cons before making a decision. All the best in navigating this situation, and feel free to reach out if you need further assistance. All the best from THE MONEY MINDER.