Thinking of cancelling your insurance? Better not hurry!!

Standard

– Writing by Hoon Joon Lee

Hello readers! Everyone having a great summer vacation? Summer this year seems to be terribly hot and rainy but hope you enjoy your precious holidays with fun and rewarding experiences! Today, I would like to discuss an issue very closely related to you: insurance. Due to numerous potential risks we face every moment in our lives, I am pretty sure most of you have at least one kind of insurance policy.

1

Unfortunately, recent reports have shown that increasing number of people are their insurance as the current economy is depressed. With the ongoing period of economic slowdown, some people are in urgent need of money in a form of cash and for some, circumstances go so bad that it becomes hard for them to consistently pay for the fee pressuring them to cancel the previously engaged insurances.

However, what people should know is that for whatever reasons they cancel their insurance contracts, it is a LOSS for them! Generally, if they cancel the insurance before the term ends, the money returned from cancellation is less than the amount they have persistently paid until then. But most do not seem to realize this and are in a hurry to get monetary damage. Furthermore, such termination can make it become harder to sign up for the insurance later on. For insurance reactivation, people would have to endure signing up process again and at worst, they might not be able to get insurance again as insurance companies sometimes deny their reinsurance depending on their health condition. Then what would be the answer for those in hard economic condition, trying to give up their insurance? I will introduce five methods to overcome financial trouble without cancelling insurance contract.

2

1. Interim Withdrawal Function

The first plan you can think of is utilizing interim withdrawal method if you are in urgent need for money. In insurances like Universal Saving Insurance, people can easily withdraw some of their saved money under conditions set in insurance policy without terminating the insurance. In general, interim withdrawal is available within 50% of cancellation refund each time, for less than 12 times a year. Later on, when their financial capacity recovers, they can be offered the same protection as before if they additionally make up for the money they have drawn out. Hence, it seems to be a great alternative when in need for emergency funds.

2. Loan

You can also make use of loan from insurance contracts if you need sizable sum of money. Contractors of insurance can swiftly borrow money within the range of contract cancellation refund without any mortgage or special conditions. Getting such loan is possible not only by directly visiting the insurance company but also by the internet, telephone, mobile or ATM as long as one can verify his or her personal identification. However, one demerit of this system compared to interim withdrawal function is that it carries some pecuniary burden since people have to pay for extra interest according to the loan.

3. Automatic Loan Payment

Third measure to be introduced is the uptake of automatic loan payment if one is incapable of affording premium. If a contractor requests for the automatic loan payment of the premium insurance will be automatically paid from lending for a certain period of time, maintaining its validity even without paying for the insurance. Nevertheless, as it is has a similar system with loans, people have to compensate it with separate interest and if used for a long period the contract might become annulled with the decrease of insurance accumulated money. Therefore, they have to check out related information including available period of loan payment carefully if they consider adopting this option.

4. Contract Change System

Furthermore, there is a contract change system to come up with. Insurance commonly being a long-term contract, a insurance policy holder is allowed to change some contents of one’s insurance under the approval of a company if he or she finds it difficult to continue the contract with worsening financial situation. Thereby, burden of the insurance can be relieved without terminating it. There are primarily two ways of making such change: reducing the insurance amount and changing the items of the insurance. Literally, people can lessen the premium they have to pay later on by cutting down the insurance coverage fee they first applied for, or they can change some articles of the contract to diminish the load. To give an example for the latter approach, in straight life insurance, people have rights to choose to reduce guarantee period until the age of 70 while keeping on with their original contract.

5. Insurance Payment Service

The last advice I can give you is an insurance forehand payment service. Forehand payment service is a system where people can receive death benefit in advance and use it for patient’s treatment and nursing if a doctor judges that the patient insured for whole life won’t survive for more than 12 months. Undoubtedly, this service is a crucial key for those considering cancelling insurance due to the burden of extreme medical expenses. People should check whether there is a provision related to the forehand payment service in insurance products they possess and make use of it.

As such, there are diverse alternatives to cancelling insurance. As mentioned before, midway cancellation of the insurance may do more harm than good; rather than hastily terminating it, you should think in a long term and make more careful and efficient decisions by utilizing the methods introduced above. Hope this article becomes of much use to you! 

-Hoon Joon Lee (hoonjoon.j.lee@gmail.com)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s