Process

• The process for surrendering a term policy involves contacting the insurer you have your policy through. You need a surrender form (available from the insurer). Fill out the surrender form and turn the form into the insurance company. This form is necessary if you have your premiums paid from your checking account through an ACH debit. If you receive a bill from the insurance company, you may surrender your policy by simply refusing to pay your premiums. You have a 30-day grace period in most states to pay your premium after you've missed the premium due date to reinstate your policy. When this time period passes, your policy terminates.
  
  

Significance

• The significance of surrendering your policy is that you lose your insurance coverage. Your policy no longer pays a benefit to your beneficiaries when you die. You no longer owe the insurer any money for premiums. If you want a new policy, you must reapply for coverage and go through the process of underwriting (i.e., a health exam).
  
  

Benefit

• The benefit of surrendering your policy is that you do not have to pay premium payments anymore. If you are struggling financially, then this may give you the extra money you need to pay for other, more immediate financial concerns.
  
  

Consideration

• Before surrendering your policy, consider making arrangements to pay for your premiums to keep your policy. Some policies, like term policies with a return of premium, do not offer a refund of your premiums if you surrender the policy prior to the policy's maturity date. Since term life insurance does not have a cash value associated with it, you will not receive an equity or cash surrender value for the policy. The primary purpose for surrendering the policy, therefore, is if you no longer have a need for the insurance or you can no longer afford it. However, keep in mind that if you decide you need insurance again, the premiums will be higher. This is because you are reapplying at an older age and life insurance premiums are driven, in large part, by age. The older you are, the higher your premiums are.