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Don’t Surrender Your Insurance Policy Because Others Said So. Read These True Stories…

Telling your friend to surrender an insurance policy may seem like a trivial matter, but if something serious were to happen to him or her, will you be able to take up the responsibility?  

Here are some true stories that I want to share with you.

How Surrendering Her Term Insurance Cost $325,000

The woman in the picture, Ms Zhao, bought term insurance 3 years ago from an insurance company in China. After her sister heard about it, she often told her how insurance are scams and how she is simply paying premiums as commissions for her insurance agent.

Following the advice of her sister, Ms Zhao cancelled her policy and refused to pick up any calls from her insurance agent.

Ms Zhao when she just purchased the insurance

Everything was fine in the beginning and Ms Zhao was happy that she saved some money from cancelling her insurance.

But one year later, she met with an car accident and had to amputate her leg. Medical costs were a bomb, she did not know what to do and even considered mortgaging her house to foot the bills.

If Ms Zhao had not surrendered her insurance policy, she would have received a payout of 1.65 Millon yuan ($325,000 SGD). After the incident, her sister was afraid to see her and even avoided her.

After Ms Zhao recovered, she appeared in CCTV (Chinese news network) to share her story so that more people could understand the value of insurance.

Take away: Don’t advice someone else to surrender their policy even if you don’t believe in it. Unless you want to take full responsibility if anything were to happen.

One phone call changed the life of this family

This woman in the picture below, Ms Liu, barged into an insurance company, created quite a scene and refused to leave. The company had no choice but to call in the police. What’s was the problem?

Ms Liu’s husband surrendered his own insurance policy behind his wife’s back thinking that it is an absolute waste of money.

A few days after that, he was caught in a work accident when a heavy object fell onto him. His condition became critical and needed more money to save his life. There was no more insurance. The family couldn’t afford it. As a last resort, Ms Liu went to the insurance company to beg for it.

What a poor family! $200,000 worth of payout gone because of complacency.

However confident you are about your health, you can never predict an accident or an illness coming. When these things happen to others, we call them “stories”. But when they happen to us, they are a tragedy.

Friend advise to surrender insurance policy but disappears when client is diagnosed with cancer.

Here is another story that was published in the newspaper.

Toward the end of 2016, a front desk customer service of an insurance company received a distressing call from a customer.

“My husband felt uncomfortable in recent months. Last week, he went to the hospital for a check-up and was diagnosed with liver cancer…”

The client was crying, pausing frequently throughout the conversation. “I just surrendered his insurance policy last month… Can I still get the payout if I pay the premium now?”

Originally, this client bought a critical illness cover of 300k and paid for it for several years. After his good friend persuaded him to give up the plan, he surrendered it. No matter how his insurance agent explained to him, his decision was firm and final. 

Nobody would guess that just a month later, he was diagnosed with lung cancer.

Since he was unable to claim from the insurance company, he tried to borrow money from his good friend who advised him to surrender the policy.

Guess what?

His friend ignored him and blocked him everywhere. 

We don’t hear these stories often, but they do happen.

People who surrender their policies to cut some cost here and there feel that they are smart. But what they do not realize is that they are simply exchanging it with the security their insurance provides! (I’m not saying that you should keep any insurance at all cost, but what I’m saying is surrendering your policy to save some cost that you don’t really need that urgently is not wise)

The scary thing about accidents or diseases is that you never know when it’ll come and hit you. And it often comes when you least expected it.

The Insurance That People Mistakenly Regard as Useless

 Term insurance is the most commonly dropped plans simply because there’s no cash value. To a person who don’t understand it’s importance, a term plan indeed sound like a bluff, You pay every single month but will not get back anything if nothing happens to you. 

The thing is even if you drop your term plan, you probably can’t save a lot. Because the premiums are generally low. Today there are term plans that you can pay for less than a hundred bucks a month and get one million dollars of coverage. It’s that cheap.

So is it useless just because it has no cash value? Absolutely not! In fact, the premium is kept at a minimal because you save on the cash value. Instead you can use the extra cash for personal investments and other needs. Isn’t it a good plan?

Tell me if you resonate with the following.

You buy an accident plan but every day goes by without a chance of using it. You start to question yourself after a few years, “Should I just drop it?”

What about life insurance? I’m guessing that you probably already forgotten what you bought!

So if premiums that we paid are non-refundable. And if accidents do not happen so frequently. Is insurance useless? 

Of course not! 

Here’s what I think:

Those that have insurance and don’t use it, they are lucky.
Those who want to use insurance but don’t have it, they are unfortunate.
Those who have no insurance and want to risk it, they are playing with fire.
Those who have insurance when they need it, they are thankful.
And to those who have insurance but don’t need to use it, they are fortunate!

Deep down in our hearts, we are afraid of so many things! Afraid of injuries, disabilities, illnesses, cancers, diabetes. Afraid of having insufficient retirement income when we are old. Afraid of becoming a burden to our children. Afraid of not being able to do our duties as a son/ daughter, husband/wife, father/ mother.

Having a good insurance coverage will remove all these fears. Even in the worst case scenario, we know that our family will be taken care of.

We buy insurance not for ourselves, but for those we love.

So if anyone tells you to surrender your insurance policy, then please ask him/ her the following questions:

  1. If I am critically ill and need money to save my life, can you lend me $500,000?
  2. If I’m involved in an accident and can’t work anymore, will you pay me an income every month?
  3. If I’m old and helpless in future, can you give me money to help me?
  4. When I die, can you take care of my wife, children and parents?
  5. Can you pay for my hospital bills?

Never surrender an insurance policy just because your friend says that it’s lousy. Speak to your financial advisor and ask him why this is a good plan for you. Listen to his analysis and evaluate for yourself!

Buying insurance will not make you rich, but not buying it may make you poor.

And who knows, it may come in handy to provide comfort and support for you and your family.

-This article is contributed by Zhu Li

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