I did Endowment Assurance for the sum of 15 lakh from the Nepal Life Insurance Company.
I already paid 3 premiums. i.e. 101496 NPR per annum which is 304488 NPR in total.
That Endowment Assurance was not good for me as the premium was too large for me and I wanted to take term life insurance instead. So, I decided to cancel my Endowment Assurance.
But, when I went to the insurance office, they said, I would not be getting all money back. They will deduct ~23k of MY MONEY and return the rest if I decide to cancel it.
They told me to take the loan (with 10% interest rate) instead of cancelling the insurance if I wanted the money badly.
Can someone explain to me how can they deduct my own cash if I decide to cancel my Endowment Assurance plan?
Shouldn’t I be able to get all my money back if I already paid 2 premiums?
Is there a way to get around it?
View on r/Nepal by nicenoicenice
Insurance is not a savings account. By my knowledge, you must have done your insurance for 15 years. This means you have a signed contract with the company and made a commitment to pay your installment yearly for 15 years. For this company promises to give you generally anywhere from 4.5% to 6.5% yearly for the whole amount you’re assured for. Meaning even if you have only paid around 100k as installment, the company gives interest on the whole policy amount of 1.5mil. For this company makes investment and also covers your risk for the whole 1.5m if something happens to you although you have only made 1/5th of total premiums. On top of this company also incurs expenses like administration and a major expense of agent commission. Which all had to come from somewhere. From my knowledge you will get back money that is equal to your installment only after 5 or 6th year.
FYI : the only insurance you should ever consider buying is term insurance and never fall for this “insurance is investment” bullshit.
TLDR: Read your contract terms and condition clearly before signing it and don’t fall for agent’s bogus promise and dreams.