How common was life insurance fraud
Cancel life insurance or not? You should know that
If you want to have your life insurance paid out early, you will often experience a nasty surprise. Because the termination is usually a losing business. But there are alternatives.
For a long time, life insurances were seen as solid and also lucrative components of old-age provision. More than four percent interest including surplus participation convinced many of the additional private pension provision.
However, that has changed in the last few years. After all, the interest rates are in the basement, which is gnawing at the income. Especially those who have to bridge a financial bottleneck are therefore considering canceling their insurance.
But you should think about that carefully. Because a termination usually goes hand in hand with losses. It is important to prevent this - because there are alternatives to termination. t-online.de shows which ones they are.
Can I cancel a life insurance policy?
That's fine. As a rule, you can take out your life insurance at the end of the current insurance period, which is usually one year.
If you cancel, you should pay attention to the notice period. This is usually one month before the end of the insurance year - not the insurance period. Often the two dates differ.
Direct insurance that you have taken out through your employer or Rürup contracts are often excluded from termination.
But be careful: In most cases, it is not worth canceling your life insurance. You can find out the reasons for this below.
What are the disadvantages of a termination?
Terminating a life insurance policy is usually a loss-making business. There are several reasons for this:
If you cancel, you will only receive the so-called surrender value. This means a certain amount that the insurance company offers you for the premiums you have paid. However, this is very low in the first few years of the contract. Because the closing fees when signing the contract documents reduce the contributions you have made.
That means: You hardly accumulate any capital in the first few years, the so-called savings portion is low. For this reason - especially in the case of early termination - the amount paid out is less than the amount of the monthly contributions paid so far.
If you cancel, you are not entitled to the so-called surplus participation. This is only paid out after the end of the term. The reason: The profit participation depends on the investment success of the life insurance - and is therefore not guaranteed or paid out earlier.
With the termination, high cancellation costs are often incurred. Most of the time these are also not listed transparently, so that you do not know exactly how high they will be.
Last but not least: Your insurance cover is immediately canceled. This can then also include supplementary insurance, such as supplementary occupational disability insurance or supplementary accident insurance, which many life insurances also contain.
What alternatives do I have to terminate?
Instead of canceling your life insurance, you have several other options. An overview:
Sale of life insurance
An alternative to termination is: You can sell the life insurance on the so-called secondary market. The prerequisite is that the policy comes from a German insurer.
The buyer takes over the insurance contract with all rights and obligations. He pays the monthly installments and can later benefit from the excess bonus paid out at the end of the contract.
The advantage for you: The sales price is usually higher than the surrender value that the insurance company offers you. In addition, in contrast to termination, there are no cancellation fees. When doing this, it is important to ensure that no further fees are incurred when selling and taking over the insurance contract.
For whom it is worthwhile: When your circumstances have changed and you need more money in the long term.
Exemption from contributions
Another alternative to termination is exemption from premiums: If you want to terminate your life insurance mainly because you are short of funds, you can alternatively simply exempt the insurance from premiums. This means that you pause your monthly payments for a certain period of time - or you suspend them right up to the end of the term.
For whom it is worthwhile: When you have a financial bottleneck that is limited.
However, you can also borrow on the surrender value. In this case, take out a loan on your life insurance. However, you should think twice about this step.
Because: You take out the loan on the money you have saved yourself. As a rule, high interest rates are due for this. By the way: You do not have a legal claim to a loan from your life insurance.
Often, however, other loans that you can use to bridge your financial bottleneck are more worthwhile than borrowing from your policy.
For whom it is worthwhile: When you need money in the short term but expect a larger amount of money.
Reversal in the event of incorrect objection instructions
Instead of a termination, you can also have a reversal checked - especially on the basis of formal errors such as an ineffective instruction on objection. This was often the case with life and pension insurance policies that were taken out between July 1994 and the end of 2007 - including Riester and Rürup contracts.
Incorrect objection instruction: Ineffective objection instructions often contain formulations according to which an objection must be received within a certain period and must be made by post - i.e. in writing. Often the instructions on objection do not stand out sufficiently from the rest of the text.
Due to the ineffectiveness of the clauses, according to a judgment of the Federal Court of Justice (BGH), the customer's right of withdrawal does not expire and can be asserted at any time (AZ: IV ZR 76/11). Even after the end of the insurance contract, incorrect or incomplete instructions on how to object can still be in the amount of several thousand euros.
At a Reversal of your contract you will get back your paid premiums including accumulated interest as well as the acquisition and administration fees. However, the insurer may withhold the sum for the insurance cover - you should bear this in mind.
Where can I get help?
If you do not know whether you should terminate your contract, sell it or, for example, make it exempt from contributions, you can get help from the Hamburg Consumer Center. This will check your insurance contract for a flat rate of 85 euros. The exam takes about four months.
You can also have your contract checked by insurance advisors. However, this advice is usually more expensive. Here you should reckon with costs of around 150 euros per hour - and a consultation can easily take several hours.
What taxes are due on termination?
Whether you have to pay tax when you terminate a life insurance contract depends on when you took out the policy. Because usually you don't pay any taxes when you sign your contract before December 31, 2004 completed. This also applies if you want to sell this insurance.
The exact conditions are as follows:
- You signed the contract by December 31, 2004.
- You are older than 60 years at the time of payment.
- The sum is paid out in one amount.
However, if you only have insurance after 2004, speak up from January 1, 2005, the following applies: You have to pay withholding tax of 25 percent - in the case of payment at the end of the term, sale or termination.
However, half of the termination is tax-free under the following conditions:
- You are over 62 years old when you pay out.
- The contract runs for at least 12 years.
- The sum is paid out in one amount.
Note:On half the profit you do not pay a flat tax - you pay your personal income tax rate. However, in order to only have to pay half of the tax, you should file a tax return.
more on the subject
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