What Happens If I Cancel My Life Insurance?
In most cases, you can cancel a life insurance policy anytime. However, there may be some exceptions to the rules regarding a life insurance cancellation policy. For example, if you have a whole life insurance policy, you may be obligated to pay surrender charges or fees if you cancel your policy. These charges can vary, but they are typically between five and ten percent of the policy’s face value.
| Policy Type | Refund |
|---|---|
| Term life insurance | No refund |
| Permanent life insurance (whole and universal life insurance) | Refund of premiums minus any fees associated with canceling the policy |
If you cancel your life insurance policy, the insurance company will send you a check for your policy’s cash value. The cash value is the money you have paid into the policy minus any fees or charges. In most cases, you will receive this money within 30 days of canceling your policy.
The fees associated with canceling your life insurance policy will vary depending on your policy type and the insurer you are with. However, you will most likely be charged a cancellation fee and a surrender charge. Cancellation fees are typically a percentage of the premiums you have paid into the policy. Surrender charges are usually a percentage of the cash value accumulated in your policy.
Before you cancel your life insurance policy, you should consider the following factors:
- Compare insurance quotes from 25 companies in seconds.
- If you are considering canceling your life insurance policy, you may want to consider selling it instead. When you sell your life insurance policy, you will receive a lump sum of cash, typically more than the policy’s cash value.
- If you need access to funds and have a universal or whole life insurance policy that is paid up, cashing it in may be a viable option. However, it is essential to understand that by doing so, you will forfeit the death benefit and may face taxes on the amount received.
There is no one-size-fits-all answer to this question. You should consider the costs of canceling your policy, the cash value of your policy, and your current financial situation before making a decision.
If you need to cancel your life insurance policy, you should contact your insurance company to discuss your options. They will help you understand the costs associated with canceling your policy and your options for receiving a refund.
