Key takeaways
- Under Schedule 8 of Malaysia's Financial Services Act 2013, you can return a new life policy within 15 days of delivery and get the premium back, less only the cost of any medical examination.
- Surrendering pays the surrender value less loans and charges; LIAM says a policy normally needs at least three years to build cash value, and BNM makes insurers warn that a surrender pays much less than the premiums paid.
- A term plan, a standalone medical card or a HealthCare policy has no cash value; cancelling a medical card refunds at most a proportionate part of the premium paid in advance.
- At Great Eastern, a policy loan on a whole life or endowment policy charges 6.3% a year compound interest (since 1 January 2022, subject to change), and any unpaid loan is deducted before a claim is paid.
- Instead of surrendering, you can ask in writing for a reduced paid-up policy (Financial Services Act 2013, Schedule 8, paragraph 8), a smaller sum assured or the removal of a rider, and keep some cover.
- A non-Muslim's policy that names a spouse, child or parent as nominee is a trust policy and cannot be surrendered without the trustee's written consent; Great Eastern's surrender forms ask for it.
What is surrender value, and how is it different from cash value?
When people say "cancel my insurance", the insurer calls it a surrender: you give up the policy and all its cover in exchange for whatever money it has built up. Three terms appear on statements and forms, and they are easy to mix up:
- Cash value: Great Eastern defines it simply as the cash refund payable when you surrender a life policy. LIAM's introduction to life insurance explains that it builds up only when your premiums are more than the cost of insurance, and that a policy normally needs at least three years in force before it has any.
- Surrender value: what you are actually paid. Great Eastern's surrender page says you receive the surrender value less indebtedness and any surrender charges. Indebtedness means policy loans, automatic premium loans (APL) and the interest on them.
- Guaranteed cash value and total cash surrender value: on a participating (bonus-paying) policy, Bank Negara requires the annual bonus statement to show both, together with the loan balance, accrued interest and the loan rate. The total includes the current value of bonuses, which are not guaranteed.
The law behind it is paragraph 6 of Schedule 8 of the Financial Services Act 2013: for a life policy that provides a surrender value, you can surrender at any time by written notice, and the value must be worked out on accepted actuarial principles and treat policy owners fairly. The insurer must also show you, at the time of sale, the surrender value and any surrender charge, or state in writing that there is none. So the sales illustration you received is the first place to look.
For your current figures, log in to e-Connect: it shows policy values and fund details, and keeps the last five years of Reversionary Bonus Annual Statements and Investment-linked Policy Annual Statements. Great Eastern's surrender form also says the actual net surrender value is fixed only when it receives your signed form, so treat an old statement as a guide.
| Type of policy | What you get if you cancel after the free-look period | Rule |
|---|---|---|
| Term life, standalone medical card, HealthCare and other plans with no cash value | No surrender value. A medical card refunds at most the premium paid in advance for the unused period, on a proportionate basis | BNM medical and health insurance policy document, para 8.22; Great Eastern's Great Medic Shield 2 PDS |
| Traditional whole life or endowment | Cash value plus the cash value of bonuses, minus loans, APL and interest; usually less than the premiums paid | LIAM; BNM disclosure rules |
| Participating policy designed and sold from 1 July 2005 | At least 90% of asset share on aggregate in early years; at least 100% from the 15th policy year for whole life (after mid-term for other plans); reversionary bonuses are not paid at face value on early termination | BNM participating life policy document, paras 9.7 and 20.2 |
| Investment-linked policy (ILP) | At least the value of units at the unit price on cancellation, minus insurance charges, policy fees and surrender charges; attached riders, including a medical rider, end with it | BNM investment-linked policy document, para 18.1 |
Changed your mind after buying? How the 15-day free-look period works
The free-look period is a legal right, not a favour. Paragraph 2 of Schedule 8 of the Financial Services Act 2013 lets you return a life policy within 15 days of its delivery. The insurer must then refund the premium, deducting only the cost of any medical examination, and the policy is treated as cancelled. Bank Negara's Product Transparency and Disclosure policy document counts this as 15 calendar days from the delivery date and requires insurers to tell you about it when you buy.
How the 15 days are counted matters. Great Eastern's free-look page gives an example: if you acknowledged receipt of the policy on 15 January, your cancellation request must reach Great Eastern by 30 January. Under the Act, a policy sent back by registered post counts as returned on the posting date, and one sent electronically on the date it is transmitted.
| Type of policy | What is refunded within the 15 days |
|---|---|
| Traditional life, medical or critical illness plan | All premiums paid, less medical examination expenses |
| Investment-linked plan | Any unallocated premium, plus the value of units at the next valuation date, plus insurance charges and fees already deducted, less medical examination expenses |
Two practical points. First, the clock runs from delivery of the policy, not from the day you signed the proposal form, so read the contract as soon as it arrives; an e-policy contract sits in e-Connect. Second, Great Eastern's surrender forms state that a surrender request received within the free-look period is handled as a free-look cancellation, as the law requires. After day 15, cancelling becomes an ordinary surrender and the rules in the table above apply.
I have paid for 5 or 10 years. Is it worth surrendering now?
There is no single answer, because it depends on what the policy still does for your family. What I can explain is why the numbers usually disappoint in the early years, and what to check before you decide.
Why the surrender value is low at first. LIAM explains that early premiums first pay for the life cover in those years and the cost of writing the policy; only the excess builds cash value. It says plainly that you will lose if you surrender before maturity. Bank Negara also requires insurers, when you stop paying, to warn you that a surrender pays much less than the premiums paid.
Participating policies improve with time. For participating policies designed and sold on or after 1 July 2005, Bank Negara's rules require cash surrender values of at least 100% of the asset share from the 15th policy year for whole life plans (after mid-term for other participating plans), against at least 90% on aggregate in the early years. The reversionary bonuses on your statement are not paid at face value if you end the policy early, and bonuses are not guaranteed.
What you give up. Great Eastern's surrender form lists it: you lose the benefits and cover of the existing policy, new cover may cost more because of your age or health or may not be available on the same terms, and new waiting periods or exclusions for pre-existing conditions may apply. LIAM adds that a replacement policy builds cash value slowly again, and the two-year contestability period and the suicide clause start afresh.
Before deciding, check these in order:
- Download your latest statement and the Premium Paid Statement in e-Connect, and put the total cash surrender value next to the premiums paid so far.
- Ask who still depends on this cover: young children, a spouse, a housing loan, ageing parents.
- Check whether a medical card or critical illness rider is attached. It ends with the policy.
- Ask whether you could buy similar cover today at your age and with your current health.
- See whether a middle option (a policy loan, a paid-up policy, a smaller sum assured) solves the real problem.
If, after all that, the policy no longer protects anyone and the money would do more for you elsewhere, surrendering can be a sensible decision. It should just be a decision you make with the numbers in front of you.
Need cash? How a policy loan and an automatic premium loan work, and what they do to the death benefit
If the policy has cash value, you may not need to surrender it to get money out. Great Eastern's policy loan page sets out the rules:
- Loans are available on whole life and endowment policies once they have cash value, generally after three full policy years; not on investment-linked, HealthCare or term policies.
- You can borrow a percentage of the gross cash value, less any existing loan or APL.
- Interest is compound, at 6.3% a year since 1 January 2022 (revised from 6.8%), and the company can change the rate.
- Any loan still outstanding is deducted before a claim is paid. LIAM adds that you can repay in a lump sum, in instalments or not at all, and whatever is unpaid, with interest, comes off the death or maturity payout.
- You apply through your agent, Customer Service (1300 1300 88), email or a branch. You sign a loan agreement, and where applicable the trustee, nominee, parent of the nominee or conditional assignee gives written consent.
Worked example (assumptions only, not a quote): a whole life policy with a sum assured of RM100,000, a policy loan of RM10,000 at 6.3% a year compounded yearly, no repayments, and bonuses left out.
| Loan left unpaid for | Amount owed (approx.) | Death benefit paid if the life assured dies then (approx.) |
|---|---|---|
| 1 year | RM10,630 | RM89,370 |
| 3 years | RM12,012 | RM87,988 |
| 5 years | RM13,573 | RM86,427 |
A policy loan is easy to take but quietly shrinks what your family receives, so agree a repayment plan with yourself when you take it.
Automatic premium loan (APL) works the same way, but automatically. If a premium is still unpaid at the end of the grace period and the policy has a surrender value, the insurer pays it as a loan against the cash value, at 6.3% a year at Great Eastern, until the cash value runs out. Bank Negara requires the insurer to tell you within 30 days of the due date that APL has been applied, and after APL has run for at most 12 months, to write to you with the other options and give you 90 days to choose. Grace periods, lapse and reinstatement are covered in my guide to lapsed policies.
Can't afford the premium? Reduce the cover, go paid-up, or surrender
Most people who ask me about cancelling do not want less protection; they want a lower bill. Under the Financial Services Act, a policy with a surrender value does not simply lapse when premiums stop, and you can ask in writing to exchange it for a paid-up policy. At Great Eastern, reducing the sum assured, cancelling a rider and converting to paid-up or extended term all go on the Request for Contractual Changes form (PSF01), which can be emailed. Match the option to your situation:
| Your situation | Option that usually fits | What to watch |
|---|---|---|
| A squeeze of a few months (job change, medical bills) | Keep the policy; let APL run or take a policy loan | 6.3% a year interest; the cash value and the claim payout are lower until you repay |
| Premium too high for good, but the family still needs cover | Reduce the sum assured or cancel a rider you no longer need | Excess premiums already paid are not refunded, and bonuses are recalculated on the lower sum assured from the start of the policy |
| Cannot pay any more premiums, and the policy has cash value | Reduced paid-up (same term, smaller sum assured) or extended term (original sum assured less loans, for a shorter period) | Extended term ends all riders and is not offered on every type of policy |
| Cover no longer needed (children grown up, loan repaid) and other protection in place | Surrender | Cover ends once the surrender value is paid |
| Bought less than 15 days ago | Free-look cancellation | Premium refunded less medical examination fees |
| Someone suggests switching to a "better" new policy | Pause and compare first | Higher premium at an older age, cash value starts from zero, contestability and suicide clauses restart |
Too many policies? Put every policy on one page: policy number, sum assured, yearly premium, riders and nominee. Keep what is hardest to buy again: your medical card and the life or critical illness cover your dependants rely on. Look first at savings riders, overlapping accident cover and cover bought for a loan you have already repaid. If the medical card is the heavy one, a higher deductible is often better than cancelling; see my guide to the medical card premium increase letter. For everything you can change midway, see changing your policy instead of cancelling.
How do I surrender a Great Eastern policy? Documents and how long the money takes
Great Eastern's surrender page sets out five steps:
- Talk to your agent or Customer Service (1300 1300 88, weekdays 8.30am to 5.15pm, or wecare-my@greateasternlife.com) for advice first.
- Complete the surrender form and prepare the supporting documents.
- Sign the same way as on your proposal form or your latest recorded signature.
- Submit it to your agent or the nearest Great Eastern office.
- For a policy with cash or investment value, you are notified when the payment is credited to your nominated bank account.
| What you need | Why |
|---|---|
| The surrender form: PSF33 for investment-linked plans, PSF48 for traditional plans with an investment value; your agent or Customer Service gives the right form for other plans | The law requires notice in writing |
| A photocopy of the policy owner's IC or passport | Required by the form |
| A witness aged 18 or above who is not your nominee or trustee and has no interest in the policy | Signatures must be witnessed by a third party |
| A bank account registered for direct credit (update it in e-Connect) | Payment goes only to a Malaysian savings or current account where you are the primary holder |
| Written consent of the trustee (trust policy) or the conditional assignee (assigned policy) | Required under Schedule 10 of the Financial Services Act and on the form |
How long does it take? Great Eastern does not publish how long it takes to approve a surrender. Once approved, its payout page says the money is credited within 2 to 3 working days, subject to the bank transfer. For an investment-linked plan, the unit price used is the one at the date and cut-off time the complete form is received: 11am for foreign funds and 3pm for local funds, with later forms treated as the next business day. Until the surrender value is paid, the policy stays in force (Financial Services Act, Schedule 8, paragraph 6(5)); once it is paid, all benefits and rights end, riders included.
A standalone medical card is cancelled by written notice. Great Eastern's Great Medic Shield 2 PDS says you then get back a certain amount of the last premium paid, provided you have not claimed on the plan.
This guide is general information, not legal advice; your policy contract sets the exact values.
Before you sign a surrender form, let me check the numbers with you
A surrender cannot be undone, and the cover does not come back. I am a Great Eastern Life Planning Advisor and have served families in Kuala Lumpur and Selangor for 13 years, mostly around Seri Kembangan, Serdang, Puchong and Cheras, in Mandarin, English and Cantonese.
On WhatsApp, send me:
- the policy number or a photo of the latest statement;
- what you want to solve: cash for a while, a lower premium, or too many policies;
- who in the family still relies on this cover.
I will help you read the surrender value, any loan balance and the options in between, and if surrendering really is the right call, I will help you with the form. If your policy is with another insurer, you can still ask me; I will tell you which figures to request from them. You can also start with a free policy review so that every policy is on one page. No hard selling: the decision is always yours.