How to Cancel Life Insurance Policy
Do you want to cancel your life insurance policy?
If so, you may want to take a second and make sure you do not need the protection.
There are several good reasons you may want to discontinue your coverage, including:
Tips for Cancelling a Policy
Part One
Researching How to Cancel Insurance
Visit Your Insurance Company’s Web Site
See if the insurer’s website has information on cancellation of a policy.
Look in the frequently asked questions section of the website for information on who to contact to cancel your policy.
Ask About the Consequences of Cancelling Your Policy
You may need to pay a cancellation penalty or fee.
If your policy will return money to you upon cancellation, the fee or penalty will be deducted from the money returned to you.
Try to Keep Your Policy "In Force"
If money is the issue, and you can no longer afford to pay your premiums, see if you can adjust your monthly budget to free-up funds to continue your policy.
You could speak with your insurance carrier and ask if you can lower your amount of coverage, which would lower your premium payments.
Part Two
Cancelling the Life Insurance Policy
Follow the Insurance Company’s Procedure’s
There will be forms you will need to complete and return to the insurance company. The forms will require you to answer some personal questions and information about your policy. You’ll need to complete the form and return it to the insurer.
Keep a copy of the completed forms. If the request is not completed, you’ll need to re-send a copy into the insurance carrier to remind them.
Put Everything in Writing
If you need to ask the insurance company any questions, do so in writing. Questions to the insurer in writing should receive a written response from the insurer. Documentation will come in handy should a dispute arise between you and the insurance company.
Cancel Automatic Payments
You may have been paying your insurance premiums automatically from your credit card or checking account. You will want to contact your bank or credit card company to cancel these payments.
Make sure to get written confirmation from the bank or credit card company that your automatic withdrawals for life insurance premium payments will stop and what date they will end.
Follow Up
If you continue to receive invoices for insurance premiums due, write a letter to the insurance company, including a copy of any documentation you kept when you cancelled your policy.
If a premium payment is erroneously deducted from your checking account, ask for a refund in writing.
Part Three
Finding Another Life Insurance Plan
Start Early
If you want to buy a new policy that costs less, then you’ll want to start the second life insurance policy before cancelling your first plan. That way, you won’t be without coverage.
The amount of time to issue a new policy can take anywhere from one day up to two months. So, allow plenty of time to get your new policy "In Force" before you cancel an existing plan.
If you have to undergo a medical exam or submit your medical records to the insurer, then you should account for that extra time, as well.
Get Multiple Life Insurance Quotes
If you are cancelling your policy because it’s too expensive but you still want coverage, then you’ll need to find an affordable policy. You may want to contact a life insurance broker or visit websites of major life insurers to compare rates.
You can look into "term" life insurance. Term life insurance often has lower premiums because it is in effect for only a specific amount of time, during which you pay the premiums, whereas whole life insurance is in effect for the entirety of your life, even after the premiums have been paid.
Term insurance is recommended for those under age 40, those who do not have sufficient income to pay for a whole life policy, or anyone who needs life insurance for a period of 30 years or less.
Apply for A Policy
Gather the paperwork and fill it out. Keep a copy for your records and mail the original back t the insurance carrier. Some insurers allow you to apply online for a policy.
Also, schedule any required medical exam and request medical records if needed by the new insurer.
Common Questions About Cancelling Your Life Insurance
How Can I Cancel My Life Insurance Policy Before It’s Approved?
Call up the insurance company that you took out the policy with and tell then you would like to cancel.
If I Owe Money on My Life Insurance Policy Will I Get Money Back When I Cancel?
If you have completed a minimum period for 3 years, then you may get back your money when you cancel your insurance policy.
Can I Cancel a Life Insurance Policy That Hasn’t Been Approved Yet?
Yes, you can cancel a policy that hasn’t been approved. Call the life insurance company or your life insurance agent or broker.
When Can I Cancel a Life Insurance Policy?
You can cancel your policy at any time.
What are the Drawbacks of Cancelling a Life Insurance Policy?
Your family is left without the financial security of life insurance protection in case you die.
And, if you have the money available in the future to purchase another policy you may find you are uninsurable due to a change in your health, or cost of coverage may be much higher.
Considerations When Cancelling Life Insurance
Is there any way you can adjust your budget to make money available to pay for your life insurance?
Ask your insurer if you can lower your amount of life insurance to reduce your premiums.
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