How to Terminate A Life Insurance Policy?
Updated On Apr 26, 2021
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Life insurance protects you from the risks of life and, in your absence, gives your family financial security. Insurance plans are not in short supply, and insurance companies also come up with innovative insurance policies and unique benefits. Often, whether they are not satisfied with it or because they found better coverage at a lower price, people try to cancel their insurance policy.
Although their policy can still be terminated, it can be very time consuming and complicated.
It is important to examine the reason why you are terminating your policy before terminating your life insurance policy. Because you forfeit your life insurance the day you terminate your life insurance policy. One of the legitimate reasons for terminating your life insurance policy is to opt for a better life insurance policy.
Also Read:- All About Life Insurance
How to Terminate Your Life Insurance Policy?
Life Insurance aims to cover the family long after the death of the policyholder to provide them with a secure life ahead. There are a few situations, though, in which a person may want to terminate his/her life insurance policy. There may be a lot of reasons for compelling them to do this.
Since the policy could differ in individuals, there is a different termination process for each of them. Given below are the procedures for each type of policy
Terminating Whole Life Insurance Policy
1. Stop Making Payments
In most situations, as simple as it is, once you stop making the life insurance policy payment, the insurance provider cancels the entire life insurance policy. If it does not succeed, however, you can look at other options
2. Cash-out Your Policy
The most convenient way to terminate your policy is to cash-out your policy directly. Even if you try to do this in the first three years after signing the policy, you will be charged a certain amount of fees (penalty) or no cash value estimate. This takes you out of the hassle quickly. If you are a policyholder planning to cash out for a term of 10 to 20 years, you will have to pay lump-sum payments. But since it depends from one insurer to the other, you do not have to face this penalty payment issue at all.
Terminating Term Life Insurance Policy
1. Writing a Letter
A letter always works for anything by providing clear details. Similarly, sending a letter will do the job when you wish to terminate your term life insurance policy without having to visit your agency.
2. Avoid Premium Payments
Another method that you can use to terminate your policy without any trouble is to avoid paying the premiums needed within a particular time. Your insurance provider will immediately cancel the policy when the insurer discovers that you have stopped making payments.
Terminating a Group Insurance Policy
It's a very easy and convenient way to cancel a group life insurance program. In certain cases, an employee's resignation or departure from the team will lead to his/her group life insurance policy being terminated as it would be converted into a personal policy.
Bottom Line
There might be a myriad of reasons why the life insurance policy would need to be terminated. Do explore each aspect thoroughly, nevertheless, before you decide to terminate your life insurance policy. Before you go for it, it is always wise to weigh all the pros and cons of terminating your life insurance policy.
Must Read:- Why Is It Important To Have Life Insurance?
