What are the disadvantages of buying back

Disadvantages of a buyback | What are the disadvantages of buying back a life insurance policy?

Over 50% of policyholders who choose to take out a Life insurance decided sooner or later to terminate their policy for financial reasons. A Buyback should lead out of the economic predicament. Due to the high demand, there are companies that specialize in such a buyback.

However, this was not possible before the change in the law in 1999. Until then, the insurance companies themselves were solely responsible for the repurchase. The surrender value that an insured person receives from the insurance company can be quite low due to the large number of deductions. But there are specialized providers who sometimes offer potential sellers up to 15% more money than regular insurance companies. However, both variants have their disadvantages.

In the case of a buyback by a dealer, there are long waiting times of between three to nine weeks at regular intervals because one has to wait for an offer or a decision by the buyer. The reason for this is usually that the purchase offer is usually processed through an intermediary who has to mediate between the seller and the interested party. Policy sellers often have no direct contact with the potential buyer or lender. The insured must be patient before the life insurance can finally be bought back. In addition, there is also the risk that the buyer will jump out and that no life insurance will be bought back.

In particular, the indirect contact between potential insurance buyers and sellers and the large number of offers from buyers can lead to insured people accepting dubious offers. There are enough black sheep on the insurance market. Before a buyback is to be concluded, it is important to carefully check whether the buyer is known or has possibly already been exposed as dubious by others.

A buyback by the insurance company has a distinct disadvantage. Contracts that were signed before 2005 and have a term of less than 12 years are subject to income tax and may result in corresponding payments.