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Canceling your life insurance policy
You can cancel your policy at any time — but you probably won’t get your money back.
If you no longer want or need coverage, you can cancel your life insurance policy. But here’s the bad news: you most likely won’t see any of the money you paid in premiums.
What's in this guide?
Can I cancel my life insurance policy?
You can typically cancel your life insurance policy at any time — either by letting your insurer know or no longer paying premiums.
Will I get my money back?
In most cases, you won’t receive a refund on the premiums you paid. There are two exceptions:
- You cancelled during the “free look period.” When you purchase a policy, insurers are legally required to give you a cooling off period. This is known as the free look period, and it lasts 10 to 30 days depending on the state you live in. If you cancel your policy during this time, you’ll be reimbursed for any premiums you paid.
- You have a return of premium policy or rider. Some insurers offer return of premium (ROP) riders or standalone policies. If you decide to cancel your coverage, you’ll receive 100% of the premiums you paid — plus the fee you paid to add the rider to your policy (if applicable). The refund might not include the cost of any administrative fees or additional riders.
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How do I cancel my life insurance policy?
The process varies between policies, but these are the general guidelines.
Canceling term life insurance
There are two ways to cancel your term life insurance policy:
- Stop paying premiums. If you fail to pay your premium by the end of the grace period — which is usually 30 days from your premium’s due date — your insurer will terminate your policy.
- Contact your insurer. You can call your insurance company, write a letter or fill out a form provided by your insurer. Be sure to include your full name, contact details, policy number and the date you’d like to cancel your coverage.
While you’re at it, cancel any automatic payments you may have set up with your bank or insurer. And if you don’t receive a confirmation from your insurer within a few business days, follow up to make sure the policy has been cancelled.
Canceling permanent life insurance
Since permanent policies have an investment component, canceling is a little more complicated. You’ll need to contact your insurer.
Depending on your insurer’s guidelines and how long you’ve owned the policy, they’ll likely give you three options:
- Surrender the policy. You might be able to surrender your policy and collect any cash value you’ve accumulated. However, you’ll probably have to pay fees — especially if you cancel within the first 10 to 20 years of taking out the policy. The catch? The cash value is taxable.
- Reduced paid-up option. This allows you to stop paying premiums but maintain a reduced death benefit on your policy. If you die, your beneficiaries will receive a lump sum.
- Let it lapse. If you stop paying premiums, your insurer will cancel your coverage. But if your policy has accumulated cash value, you’ll lose it — so only go down this route if you’re comfortable with that.
What about my group life insurance?
If your employer decides to stop offering life insurance as part of its employee benefits, it can cancel your policy. Otherwise, your coverage will automatically be cancelled when you leave that job — unless there’s an option to convert to an individual policy.
Reasons to cancel
If these situations apply to you, it might make sense to cancel your life insurance:
- You no longer have financial dependents.
- You’ve paid off all of your debt.
- You can’t afford the premiums.
- You want to invest your money in an account or portfolio with higher returns.
- You want to take a more aggressive approach to investing.
- You want to collect the cash value portion of your policy.
- You’ve stopped smoking or your health has improved, and you’ve been offered a better rate on a new life insurance policy.
What if I change my mind about canceling my policy?
You’ll need to apply for a new policy, and potentially go through the underwriting process again. Your insurer will charge you a much higher rate, too. This is because life insurance premiums are based on factors like your age and health, so the longer you wait, the more you’ll pay for coverage.
If you let your policy lapse, most providers will reinstate your coverage within 30 days. You might not need to fill out any additional paperwork, but you will have to make up the premiums you missed.
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Can my life insurance company cancel my policy?
Your insurer can cancel your policy in two circumstances:
- You haven’t paid your premium within the grace period.
- You lied on your application. A life insurance application is a legally binding document, and lying on it is a form of fraud. If your insurer discovers you withheld pertinent information, they have the right to raise your rates or cancel coverage.
Your insurance company can’t cancel your coverage if you start smoking, take up a dangerous job, gain weight, or are diagnosed with a health condition.
I don’t want to cancel my coverage completely. What are my options?
If you want to hold onto your policy, you might be able to:
- Reduce your coverage. Most insurers will allow you to decrease the face value of your policy once — and in turn, lower your premiums.
- Take a new medical exam. If you’ve had your policy for at least a year and your health has significantly improved, your insurer may let you take another medical exam. If the results are good, they might lower your rate.
Bottom line
Canceling it is a fairly straightforward process, and can be as easy as you stopping payments. But unless you have a return of premium policy or cancel during the free look period, you won’t get your money back.
To find a policy that suits your specific needs and budget, compare life insurance providers.
Ask an Expert
Hi, I need a form to cancel our son’s life insurance policy. We had this policy taken on him when he was young but now we like to cancel it. Our son never found out we had this policy.
Hi Arne,
Thank you for reaching out to Finder.
IF you know the name of the company as well as the policy number of the insurance you took out, you may contact the insurance company directly to request for a cancellation form to start the process. Hope this helps!
Cheers,
Reggie
I have been paying a life insurance policy for about 15 years. It is only for $10,000 & $5,000 accidental death cover. The premiums have just gone up from $78 to $100 per month and I can no longer afford it. I have just turned 70 and just wanted a little money to leave for my disabled child. I struggle as it is should I keep paying or cancel the policy?
Hi Judy,
I am sorry to hear about the recent premium increase on your life insurance policy, which has now made it unaffordable for you. To help you determine how you should move forward, here are some things for you to consider:
1. You can compare your options on our life insurance page to try to find a better price for the same coverage.
2. If you cancel and use that money to pay $75 a month into an interest bearing savings account instead, within 5 years you would have $5,000.
3. Remember that certain policy rates increase with age, so you may face another increase in the future.
Ultimately, assessing your current financial situation will go a long way in helping you decide which course of action is right for you. I hope this helped! And please feel free to reach out with any additional concerns.
Best,
Zak
yes
Hi Wei,
Thank you for reaching out to finder.
If you are pertaining to yes in canceling your life insurance policy, you may do this by contacting the company where you took the policy out to know about the procedure in having this process completed. Hope this helps!
Cheers,
Reggie
Can I cancel my life insurance if it’s linked to my bond
Hi Lizette,
Thanks for reaching out! Generally, there is a period option in a life insurance which you can cancel your policy within days of policy starts. It would be best to review your policy as well as the terms and conditions of the bond to check for any consequences when you do decide to cancel it.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Best,
Nikki
Do I have money since my mom passed
Hi Heidi,
Thanks for leaving a question on finder and sorry to hear about your mother’s passing.
If your mother has life insurance, you can file a life insurance claim by following these steps:
1. Prepare to file. To file a claim, your insurer will typically require a copy of the death certificate, related medical reports and any original policy documents available.
2. Notify your insurer. Your beneficiary or rep contacts the insurance company by phone or online to start a claim. At this point, only policy information and the date and cause of death are required.
3. Follow your insurer’s procedure. From here, the process depends on your insurer. Generally, your beneficiaries will receive hard-copy forms to complete against specific instructions. Your insurer may also assign an officer to your claim.
4. Submit forms and supporting documentation. Your beneficiaries submit completed claims form, your death certificate and other documents as requested. 5. They’ll also indicate their payout preferences, either a lump sum or structured annuities.
Wait for assessment. Your insurer assesses your policy’s claim and supporting documentation. The process can take anywhere from a week to a month or more.
6. Learn claim decision. Your insurer announces whether your policy’s claim is accepted, declined or requires additional information.
-Payment of claim. Your insurer pays out the claim by check as requested by the beneficiaries. Ongoing payments can be sent by check or direct deposit to a bank account.
-Rejection of claim. If your insurer declines the claim, your beneficiaries have the option to file an immediate objection unless the rejection is due to fraudulent or falsified information in the policy or claim.
After your insurer pays out the benefit to your beneficiaries, your policy is considered closed. The payouts might be subject to taxes depending on your circumstances.
Cheers,
Joel