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Is it possible to move my retirement savings (the cash value of my insurance policy) to a new life insurance policy? I found a policy from another insurance company which has a much better interest rate than my current policy.
Hi there,
Legally speaking, you have the right to transfer 3a or 3b savings from one mixed insurance policy to another. However, you may be limited by the terms and conditions of your policy.
You should bear in mind that mixed life insurance providers charge administrative fees and also deduct premiums for the term life insurance portion of your policy from the premiums which you pay. You may also pay policy termination fees and transfers fees. Typically, the premiums you pay during your first years as a policyholder (above the term life insurance premium) are used to cover administrative fees.
What this means is that the cash value which you are able to transfer from your 3a mixed life insurance policy to another policy may be much lower than the total of premiums paid. This is especially true if you terminate a life insurance policy after just a few years because the policy has not had time to build cash value.
It is worth noting that in many cases, using separate 3a retirement accounts and term life insurance policies can be more affordable than using mixed life insurance because you do not pay additional administrative fees.
Best regards from Moneyguru
More on this topic:
3a retirement account comparison
Term life insurance comparison
