Costs eat up the savings portion
The individual insurance companies can determine themselves how high their final fees for life insurance are. Usually, one percent of the sum insured is assumed. If this is 100,000 Swiss francs, the share of the fees is 1,000 francs. These are first offset against the paid-in premiums, then the savings amount is calculated.
With a premium of CHF 250 per year, the first four years are only used to repay the fees. A fee is also due for one-off payments, which are then deducted directly from this payment. Interest is formed from the remaining amount, which ultimately increases the savings amount. However, this results in a lower surrender value! This loss can only be made up if you invest the money alternatively and make a profit there.
Remember that interest income from life insurance may be tax free, which is not the case with other investments. From this point of view, the cancellation and payment of life insurance only makes sense if a profitable alternative investment is available, in which the losses can be offset again. Otherwise you should speak to the insurance company and ask for a reduction in the premiums. A life insurance contract may also be suspended, so that you do not have to consider terminating the contract if you have financial problems.
New insurance protection problematic
If you have canceled a policy and want to take out new insurance cover, you may be unlucky with this project. If some time has passed in the meantime, you may reject some insurance policies for reasons of age or charge very high premiums. If you are in poor health, you may not get a new contract at all. In addition, many insurers simply do not like to see life insurance simply canceled? If the question about previously concluded insurance contracts is answered by the fact that such a contract has been terminated or terminated, this can be an exclusion criterion for you.
Conclusion: canceling or terminating life insurance is not always sensible
There may certainly be cases where it makes sense to terminate the insurance contract. However, given that this can result in high financial losses, the project should be given alternatives. This means that it may be better to let the contract rest indefinitely in agreement with the insurer. In particular, termination within a few years of taking out life insurance is lossy since the insurer first deducts all of its fees. The surrender value of life insurance is therefore much lower.
If you would like to take out life insurance, please inform yourself precisely about the current providers and their conditions. You should also consider the possibilities of termination or a change in the comparison.
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