All About Terminating A Life Insurance Policy

Published On May 04, 2021 12:00 PM By InsuranceDekho

If the policyholder is not satisfied with their insurance plan and with the benefits it is offering, then they can choose to terminate their insurance plan. This could be due to many reasons such as premiums are too high, policy is no longer required, etc. Be it for whatever reason but there are certain ways to terminate the life insurance plan. Policyholders should cancel their policy during the cooling period in order to receive the refund of the premiums paid by them.

How to Terminate a Life Insurance Plan?

Terminating a life insurance policy is not a difficult task. However, the process for cancelling the policy differs based upon the type of policy an individual owns:

A policyholder can terminate their life insurance plan by using the following ways:

1. Inform the Insurance Provider

  • Policyholders should contact their life insurance company and express their wish to terminate their existing life insurance plan. Generally, after hearing the concern of the policyholder, the insurance company presents alternative solutions to the customers.
  • However, if the policyholder still wishes to terminate their life insurance plan, they can proceed ahead by downloading the termination form from the official website of the insurance company. Also, the policyholders can obtain the form from any nearest branch of the insurance company and fill up the details as required.
  • Once the termination form gets submitted, necessary steps would be taken by the insurance company to terminate the insurance policy. In case, the policy gets terminated after the cooling period, no refunds would be made by the insurance provider.

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2. Avoid Paying Premiums

The policyholder can also terminate the policy without getting into much hassle by not making the premium payments that are needed on a timely basis. When it would get noticed by the insurance company, they would automatically terminate the insurance plan.

What Happens After Terminating Life Insurance Policy?

After termination of the life insurance policy, the individuals have to bear the following consequences:

1. Loss of Coverage and Benefits

An individual safeguards themselves and their family members by the means of buying a life insurance plan. However, after the termination of a life insurance plan, an individual would lose out on the coverage and the benefits that are guaranteed upon buying a life insurance plan.

2. No More Premium Payments

Most of the time, a n individual who terminates their life insurance plan does not receive any refunds. Also, they lose out on the premium payment that could have been used for various advantages. However, at the time of termination of the whole life insurance plan, a few insurance companies do offer refunds to the insurers.

3. Go through Entire Buying Process Again

Once the policyholder terminates the life insurance plan but later decides to purchase the policy again, in such a scenario, they are required to undergo the whole policy purchase process once again. The process includes medical examination, doing other necessary formalities etc, which could turn out to be a major hassle for the individuals. Moreover, it could also happen that the rates of the policy goes much higher than before, so one should reconsider prior to terminating a policy.

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Final Words

There could be a lot of reasons as to why a policyholder wishes to terminate their life insurance plan. However, before terminating the policy, it is significant to understand each factor in detail. One should move ahead with their decision only after measuring both the negative and positive aspects of terminating the plan.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.