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Ask the Life Insurance Expert

My insurance company told me that I don’t get any cash for my term life insurance policy. Is that right?

That’s correct. Term life insurance policies do not accumulate any cash value.  It also has no surrender value if you want out of the policy.  

A term life insurance policy covers you for a specific portion of time, such as 10, 15 or 20 years.  This type of policy is straightforward in that the amount of the policy only is paid out if you die during the time the policy is valid.  

If you want to terminate a term life policy, you don’t get any refund of the premiums paid in.  The policy covered you during the period you had it, and that is what the premiums went towards.  Just as with car insurance, you don’t get a refund at the end of your policy if you didn’t “use” it for claims.

If you want more than a death benefit from your life insurance policy, you need to purchase a permanent life policy that would accumulate a cash value.  Review our basics of life insurance page to learn the differences between term and whole life insurance policies.

Last updated: Jul. 17, 2014