Can I cancel my life insurance policy at any time?
You Can Cancel Your Life Insurance Policy
You can always cancel your life insurance policy at any time. However, you should think carefully before deciding to cancel. As there may also be tax consequences for cancellation, and buying a new policy in the future will be more expensive. Canceling a whole life insurance policy can sometimes be complicated if you have borrowed against your policy and have not repaid. It’s always best to speak with your agent about your options before you cancel.
Common Reason People Cancel
A common reason people cancel their life insurance policy is affordability. They no longer feel they can afford the expense of maintaining the policy. some may cancel their life insurance policy for other reasons; changes in personal circumstances, business failure, divorce, bankruptcy. These and other situations can affect the need for life insurance coverage. In a more positive situation, for example; you had a life insurance policy that protected your mortgage repayments, but a windfall inheritance enabled you to pay off your mortgage early.
Some consumers cancel a life insurance plan because they find they can get a better deal elsewhere, especially on term life insurance. Term policies tend to be relatively inexpensive. If you are looking to replace a policy, please ready and compare policies very carefully. You may be replace a whole life policy for a cheap term life policy. Then in years to come you find you no longer have coverage, or coverage has become too expensive as you have exhausted your term life policy. Another very important consideration; do not cancel your policy until you’re 100% certain that the new policy has gone into effect. It is always important that you read your policy very carefully before you cancel.
Return-Of-Premium Rider Can Get You Money Back
If you have what’s called a return-of-premium rider on your policy, you could get a check back if you cancel. The most obvious reason for caution is that cancellation means you and your family will lose the protection the cover offers. You may decide to cancel your life insurance policy because the reason you bought your cover has changed. But you should also bear in mind that the cost of insurance in the future – if you decide to take out cover again – could be significantly higher than with your current policy.
People Change – Life Insurance Needs Change
As people get older, the original reason they had for taking the life insurance policy may no longer be relevant. In many cases, you’ll lose value if you cancel in the policy’s early years. Most people purchase term life insurance to cover specific expenses, such as to ensure support for children living at home or to help pay their college tuition. If you’ve bought a whole life insurance policy, you’ll often pay at least twice as much, and that could strain your budget if you’ve lost your source of income. But if you’ve miscalculated and would prefer not to pay premiums, speak to your agent. In cases such as this, you should bear in mind that even if the original grounds for setting up the policy have changed, life insurance still gives your family extra financial security if anything happens to you.