It's been several months since the scheduled interest rate was lowered, and the popularity of whole life insurance has decreased slightly, but it is still high.
Many friends want to buy a whole life insurance as protection or financial management, but they rush to start without understanding it clearly.
As a result, some people may step on some pits.
So, can whole life insurance get the principal back? Will it lose money?
To know whether whole life insurance can get back the principal, you must first understand what the scope of its protection and income is.
Generally speaking, whole life insurance can be divided into fixed whole life and incremental whole life.
A fixed amount, that is, the sum insured will not change, and the increase amount can increase over time.
Fixed amount whole life insurance is more protective in nature, similar to term life insurance, mainly to provide us with a personal protection.
Incremental whole life insurance is a wealth management insurance product, which provides a certain amount of death protection while obtaining income.
Nowadays, most friends buy whole life insurance, but in fact, they choose to increase the whole life insurance.
We can look at how the fixed and increased whole life insurance products pay back separately.
The fixed amount, the amount of coverage has been determined, and it will not change.
Suppose someone insures $500,000, then the death benefit is $500,000.
Regardless of when he dies, the insurance company will pay compensation according to the amount of insurance agreed at the time of application.
The cash value of fixed whole life grows at a slower rate and it is often difficult to exceed the premiums paid in a relatively short period of time.
The increase means that the sum insured increases year by year, and it can continue to increase with age.
In other words, the longer we hold the policy, the more the cash value of the policy will accumulate.
Over time, the sum insured will inevitably exceed the premiums paid.
Generally speaking, the payback time of incremental whole life insurance is 5-10 years.
When the cash value of the policy exceeds the accumulated premiums paid, you can get back the full principal and income when you surrender the policy.
It is normal for many people to buy whole life insurance and choose to surrender the policy but not get back the principal, that is, the premiums paid.
Because this type of long-term insurance is surrendered, it is not the premiums paid that are refunded, but the cash value of the policy.
If you choose to surrender the policy a few years before the policy, the cash value of the policy will only accumulate a little.
You may have paid tens of thousands of premiums, and the cash value of the policy is only a few thousand dollars. At this time, surrendering the policy will definitely lose money.
Therefore, if you want to get back the principal, it is best to wait until 5-10 years later, when the cash value of the policy exceeds the accumulated premiums paid before surrendering the policy.
In addition to surrendering the policy, there are ways to get back the principal of a whole life insurance policy.
For example, if you reduce your policy, you can withdraw part of the cash value of the policy for emergencies.
After withdrawing part of the cash value, the remaining cash value can continue to accumulate to generate income and provide long-term stable financial support.
Of course, there are certain restrictions on policy reduction, and it is impossible to withdraw all the policy value at once.
Some products stipulate that a maximum of 20% is withdrawn per year, which is also a lot of money.
There are also benefits in the event of death or total disability.
Generally speaking, whole life insurance products require that the premiums paid can be paid in the event of death or total disability before the age of 18, and the maximum of the cash value, accumulated premiums paid and sum assured will be paid after the age of 18.
Although it seems cruel, it is true that you can get the principal back.
In general, there is no fixed answer to whether you can get back the principal of whole life insurance, and it needs to be determined on a case-by-case basis.
We also have to choose products according to our actual situation and buy insurance that is really suitable for us.