The short answer
It depends on the kind of funeral policy you took out.
The long answer
Whether you can claim a funeral policy when you stop paying the premiums depends on the kind of funeral policy you took out. For example, the AVBOB Cashback Policy allows members who have not made any claims for five years in a row to receive their fifth year’s premiums back in cash.
But 10x says that with most funeral policies, you will not get any cash back if you cancel the policy.
Hippo website explains that there is usually a 30-day cooling-off period, which means that if you cancel your funeral plan within the first 30 days (for any reason whatsoever) you should receive a full refund of that month’s premium which you have paid, provided that you have not claimed. But if you cancel your funeral policy after the 30-day cooling-off period, you will not get anything back.
This is because, unlike life insurance policies, funeral insurance policies do not acquire any surrender or paid-up value.
So, what does surrender value or paid-up value mean?
The Motley Fool website explains: “The cash surrender value of a life insurance policy is the amount of money (minus fees) the policyholder will receive if they voluntarily surrender or terminate the policy.’
A paid-up value is the value of your sum assured after you stop paying your premiums. The sum assured decided at the start of the policy is reduced if you do not pay all the premiums. This reduced sum assured is known as the Paid-up Value.”
But neither surrender value nor paid-up value apply to funeral policies.
Wishing you the best,
Answered on Sept. 14, 2023, 2:06 p.m.
Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.