How does it work?
Your premiums will stay the same regardless of your age with level premiums, however, it will convert to stepped premiums at the cut-off age, usually between the age of 60 to 65. With stepped premiums, your rates will increase overtime with age and become considerably more expensive in the later stages of life. On the other hand, Hybrid premiums offer the benefits of both level and stepped premiums, so your premiums will increase as you age at the first stage of your cover, and fixed to a specific rate for the rest of the policy life.
Here is the email I received regarding surrender value. Premiums I have paid over 15 years total approximately $7100.
We refer to your recent enquiry regarding the above policy and are pleased to confirm the surrender value effective 6 February 2018 is $3,096.94.
Please note this is an estimate only and cannot be guaranteed.
Hi Joanne, thanks for your inquiry.
Can you please confirm what the question is?
Thanks.
Jonathan
I have a Whole of Life policy Westpac Estate Plan that I have been paying premiums into for 15 years. The policy has a cash value.
As the amount of premiums is almost the same as the benefit I decided to surrender the policy rather than pay another 5 yrs of premiums.
Contrary to the research I have done regarding Surrender cash value of a Whole Life Policy I was told by an officer of Westpac that I do not get all my premiums back nor am I entitled to any profits and there will be a reduction in the cash value due to me, compared to the premiums I have paid. They also notified me that they do not charge any fees for surrendering a policy and were vague on what the deduction in the cash value was for. I was also denied access to a loan from the policy or to use it as collatarol.
All of their information is contrary to what I have read regarding Whole Life Policies.
I am awaiting an email from them regarding the surrender value and I am now very worried about the deduction they may make on the surrender value.
Why is my whole life policy different to the information I have read and researched regarding whole life policys?
Hi Joanne,
Thanks for your question.
There could be a variety of factors as to why you won’t get all your premiums back e.g. the specific terms between your insurer and you (the policyholder).
Generally, Surrender Value may not pay out the full value of what has been invested. I found a clause in an Australian whole of life policy that states:
“The full value of your sum insured and bonuses are only payable in full when the sum insured becomes payable, usually on death or maturity. Therefore, the surrender value of a policy will generally be less than the amount you would receive upon the death of the insured or when the policy matures.”
Similarly, in Westpac’s PDS states:
“This is not a savings plan. But the policy may have a surrender or cash value if it has been in force for at least 3 years. In this event, you are entitled to a payment if you end the policy; but you are not entitled to share in any profit or surplus.”
For more clarity, continue getting in touch with your insurer or even speak to a financial adviser.
I hope this helps,
Maurice
Hi Joanne,
Thanks for getting in touch. Please note that finder is a comparison website and we are not insurance experts so we can only offer a general advice.
If you have not withdrawn or loaned the cash value of your insurance, it is possible to get it back. But please also note that there may be fees associated with your surrender like in the form surrender charges. Usually, these surrender fees are taken from the cash value. While we do not exactly know what is outlined in your policy, it would be best that you get in touch with Westpac again and double check the deductions/fees they charged against your cash value.
Cheers,
May