How To Cancel Term Life Insurance Policy?
Updated On Dec 21, 2022
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Whether it's to replace lost income, pay off debts, send their children to college, or for a variety of other reasons, people get insurance coverage for a specific reason. When a need, such as children growing up or debt repayment, has been addressed, it may sound right to cancel a life insurance policy. Whatever your reason, cancelling a policy of life insurance is a rather simple process. Your life insurance policy's type will determine the procedure.
The financial security of your family depends on having a life insurance, but there are specific situations where it may be wise to cancel your coverage. For instance, you won't need insurance to pay off any debts when you pay them off.
Calling your insurance company or forgoing any foreseeable premium payments are two easy ways to end your life insurance coverage. However, the effects of cancelling depend on how long you've had your plan, and if you have whole life insurance coverage, that is more complicated and may have cancellation fees, as opposed to term life insurance coverage, which is easier to cancel.
There are methods for reducing your premiums without sacrificing your insurance coverage if cost is your primary justification for cancelling coverage.
Life Insurance Policy Cancellation Procedure
It is significantly easier to terminate term insurance than complete insurance. You are free to revoke your life insurance coverage at any moment, regardless of the type of coverage. But whether you can get any of the money back depends on when you cancel the policy.
Making A Cancellation During Free Look Time
During the free look phase, which starts as soon as your plan is given to you and lasts for 30 days, you can cancel your life insurance policy if you immediately repent your decision to buy it and pay nothing. All premiums paid are fully reimbursed if you cancel during free look time.
Depending on your insurance company and state laws, free look periods might run for 10 to 30 days.
Cancelling Term Life Insurance
- Pay No More Premiums.
Your insurance is terminated if a premium payment is missed and not made within the grace period, which is the 30- to 31-day period following the due date during which you are still covered.
- Send A Letter.
If you want to cancel your coverage, let your insurer know in writing. You can write a very simple letter in addition to filing a stop-payment order for the premiums, as some policies specify in their terms.
- Contact The Service Provider.
Most life insurance companies will allow you to cancel the policy over through the phone, or at the very least, start the procedure. A representative can walk you through the process if you are prepared with your policy number.
There are no fees or penalties for terminating term life insurance coverage, regardless of how you decide to do it.
The cost of treatment. Under Section 80D, premiums for the critical illness insurance are also deductible.
When Should A Life Insurance Policy Be Cancelled?
If you have dependents or joint debts, it's necessary to always have life insurance coverage. but there are good reasons to think about cancelling your policy. You could, for instance:
- Look elsewhere for coverage that is more economical.
- Do not require the policy
- Want to withdraw the cash value
It's not a good idea to cancel your life insurance coverage if someone still depends on your income. In addition to leaving your family members unprotected, discontinuing your coverage surrenders your current rates. Your insurance premiums would be greater if you determine you'll need insurance later. There are methods to reduce your premiums or modify your coverage without fully loosing life insurance protection if your policy no longer suits your needs or financial situation.