What happens to all the money you put in to a life insurance policy if you dont die?
by the time the policy has ended? Do you get any of the money back, if so how much?
Some companies (like Sun Alliance) will pay out after a period of 15 years if you don't die but it's not the whole amount you pay in that you get back and it's not guaranteed. It's more like a savings plan with life insurance included so if you do die within that period of time they will pay a guaranteed amount out. it depends on the nature of the policy. If it's an endowment policy the money is invested on your behalf and you get the value of the fund back at the end of the policy term. If it's a whole of life policy it only pays out if you die during the term of the policy. If you don't die the money goes into a fund to provide a payout to people who have similar policies and who do die during the policy term.
You can take out an insurance policy on your life through the unit trusts system. You pay in a monthly amount of say £100 and this, depending on your age when you start the policy, will pay out a fixed amount on your death. The money that you are saving will hopefully build up as it is linked to the stock market and increase in value over and above what you actually pay in. When the value of your policy exceeds the fixed pay out amount that then becomes your insurance value. At the end of the term that you fix you are paid out in full on that policy and the savings. You can cash in the policy at any time though but in the first 3-5 years there are penalties in the form of lower payout. Straight life insurance will pay out on your death but only the sum assured at the outset. The younger you are when you start the better the payout. If you don't die? Well, I guess you could make plenty of money in a freak show, starting at about age 130 or so, but you probably will die, eventually. If it's a term policy, and you don't die within the term, you get nothing. If it has a return of premium rider, you'll get all your money back. If it's whole life, your beneficiary gets the whole death benefit when you die, which unless you are the Highlander, you will. If it's Universal life, there's no telling what will happen to the money at any point. Pretty much whatever the insurance company wants to happen with it.
Answers: I don't know what type of life insurance you are talking about, so I'll go over the 2 types of life insurance currently out there.
First type is called cash value life insurance. These are life insurance policies that covers you until the around of age 100. If you live to the age of 100 (or whenever the policy expires), the company will pay the cash value out to you, but there is no more death benefit. If you die while the policy is still enforced, the company pays out the death benefit, but they keep the cash value. If you are living while the policy is still enforced, you can take a loan out from the policy and pay loan interest of 6-8% or you can surrender the policy and surrender charges will apply on the cash value. As you can see there's nothing good about this type of life insurance.
Second type is called term life insurance. Term life insurance doesn't build cash value, that's why premiums are lower than cash value life insurance. At the end of term, you get nothing back. Its like car insurance. If the auto policy expires, you don't get money back.
However, you can renew your term insurance without having to provide proof of insurability. Most term policies are guaranteed renewable to around the age of 100. The positive fact about term insurance is that it gives you options on where you can save your money. You can save money in the bank, CDs, money markets, or in mutual funds. If you cancel your term insurance, it won't affect your savings. If you stop saving money, it won't affect your term insurance. Why? It's because life insurance and savings are kept separate and they don't affect each other as to cash value life insurance.
1. Your total premiums (for years or months) or total savings of a life insurance policy will be paid back to you LESS interest, LESS Insurance charges if you don't die.
2. You will have to pass through a very rigorous court processes before payment because, what-ever benefit of the policy should not have been for you.
3. Please note that when you take up a life insurance policy, you have agreed with the Insurance company ((life of the policy), the time that you must die.
4. If you do not die within the tenure of your policy, (that is the agreed period), you have contravened the signed agreement.
5. If you die within the agreed period, your nominated next of kin takes all the benefits.
6. Your only benefits while the policy lasts are:
- You could use it as a collateral to borrow from the bank
- You could use it to claim reduction in tax charges
- You could use it as a bail bond
you will die we all do your question should be
what if you want your money while you are still alive
each insurance company handles that differently
of course not, its insurance, if they gave you the money back then how would they make any to pay out the policies.
Do you get your money back if you don't crash your car?
Some policies don't "end." It depends on the type of insurance - whole life vs. term, etc. It all gets spent on a giant office party!
The insurance company use it to run their company - silly No you don't get any money back from a basic Life Assurance Policy. You just get the peace of mind that if you died there would be money for your loved ones to pay towards Mortgage etc.
There are two types of life cover. Traditionally they are simple term assurance / decreasing term assurance where you are insured for an amount (e.g. 100k) for a term (e.g. 25yrs). If you reach the 25 yrs without croaking you get nothing. Decreasing term is similar but the sum insured goes down over time. Particularly useful for cover on a repayment mortgage as the outstanding mortgage amount decreases over the term.
The other, much more expensive type, is known as life "assurance" and contains an element of investment. There are several names for this, endowment, savings plan etc. The idea is that part of the monthly premium goes to cover you for life insurance (should you die within the term) and the other part goes into some sort of investment facility to build and become payable at the end of the term.
I see someone mentioned "whole of life". They have the details slightly wrong. In this type the sum insured is payable on death whenever it occurs. Hence the name whole of life. As we will ALL die the insurers use mortality tables to guess when you are to die and offer the sums insured / premiums accordingly. When you do eventually die the idea is that you have lived for a long time and paid in enough premium for the insurer to have invested the premiums in order to pay you out more than had you saved in the bank. Particularly useful for funeral expenses, death duties etc but becoming less popular nowadays.
NO YOUR NEXT OF KIN GETS IT WHEN YOU DIE In our system, you get it all back with the interest earned