Should I withdraw life insurance money early?

Early withdrawal of life insurance is when the buyer (participant) wants to withdraw the insurance money before the term specified in the contract. For example, a customer participates in an insurance contract with a plan to pay premiums for 10 years but is forced to withdraw in the third year because he needs money.

Should I withdraw insurance money early?

Withdrawing insurance money before maturity will affect a part of the profit as well as the incentives initially committed in the contract. However, withdrawing life insurance money before maturity also depends on the time of withdrawal and the benefits and damages that come with it.

Whether or not to withdraw life insurance money early depends on the situation of each contract. Specifically, the insured needs to estimate the amount of money to be received, the penalty fees deducted and compare it with the amount of insurance paid during the contract period to consider the benefits and losses.

According to the Law on Insurance Business, from the 10th year onwards, the surrender value of a new life insurance contract is equivalent to the premium paid by the participant.

Therefore, if the contract is canceled before this time, the participant may not receive the expected refund value. However, in reality, the impact of premature withdrawal depends on each company's policy, or the agreement between the insurance company and the participant.

Notes when withdrawing life insurance money before maturity

Withdrawing insurance money before maturity is considered a force majeure option, because it causes both the buyer and the seller to suffer losses, especially the buyer. To ensure their own rights when withdrawing money, customers need to pay attention to the following:

- Wait at least 2 years from the date of signing the contract: Most types of insurance only allow customers to withdraw early when the contract starts entering the third year or later. Therefore, customers need to wait until the end of the first 2 years or from 4 - 6 - 8 years... (according to the milestones in the contract) to be able to withdraw the largest amount of money and pay the least fees possible.

- Do not terminate the contract immediately: When choosing to terminate the contract, the participant will immediately lose the benefits that come with it during the contract processing period. Therefore, customers should choose to withdraw life insurance money before maturity by withdrawing from the contract account value or making an advance from the contract account/refund value. With this method, some of the customer's basic insurance benefits are still guaranteed.

- Request certified documents: When working with insurance brokers and insurance companies, customers should request clear, complete and transparent emails, documents, contracts... to ensure rights and limit legal risks.

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