How to Cancel Your Life Insurance Policy

Here are some of the most common reasons for cancelling a life insurance policy: 

1.  If your family has grown and your spouse/partner can support themselves without a death benefit, it is possible that you may not require life insurance.  
2. If you can't afford your life insurance premiums, you should consider cancelling your policy. 
3. You may have come to the conclusion that another financial instrument offers better investment options for long-term savings than your whole life insurance policy. You can find out if you would be more profitable with something like a mutual fund or an annuity with the aid of a financial advisor.

Alternatives for Cancelling a Life Insurance Policy

If your inability to pay the premium is your main reason for cancelling your policy, you can get in touch with your insurance company and ask for lower life cover, which will result in a lower premium. You can upgrade your policy once again when your finances are stable enough for you to pay the premiums on your policy. Your insurer will give you a few options for keeping the policy. You won't have to cancel your life insurance policy if you find the alternative acceptable.

Conditions for Receiving Surrender Benefits

Based on the number of completed policy years, a surrender benefit may be paid if you surrender your policy before the end of the policy's term. After three years, a policy's surrender value becomes available. If the policyholder pays the premiums for the time frame specified, a surrender benefit may be paid at the conclusion of that duration.

Cancellation Refund

Every life insurance policy has a cool off period or grace period that allows the insured to assess their insurance needs and to ensure that the life insurance policy they have is the right one. If an individual cancels their policy within the grace period or cool off period, they will get a refund of all the premiums until then and won't be charged any additional fee.

How to cancel your life insurance policy?

1. The insured has to contact the life insurance provider and convey their wish to cancel the policy.
2. Usually, the insurance provider provides alternate options and solutions to the insurer
3. If the insurer still wishes to cancel the life insurance policy, they can download the cancellation form from the bank's website or obtain it from the branch office and fill up the details
4. Once the cancellation form is submitted to the bank, the bank will get on to the process of cancelling the policy
5. No refunds will be made if the policy is cancelled outside of the cooling off period.

Reasons Not to Cancel the Insurance Policy

Some of the main reasons to not cancel the insurance policy are mentioned below:

1. The premium of the policy may increase in case you change the address.
2. In case you have changed the job, the premium may be affected in case of a new policy.
3. Medical conditions can affect the premium that must be paid.
4. As you grow older, the premium that must be paid will increase.
5. You will not receive any refund in case you cancel the policy post the grace period.
6. If the policy is cancelled, the family members of the deceased policyholder will not be able to avail the benefits.
7. You will not be able to avail tax benefits under Section 80C for your premium payments. 
8. You won’t receive surrender benefits if you surrender your life insurance policy before the specified duration of time which is typically three years.
9. The policy must be in effect for a specific amount of time to qualify for some additions and bonuses. You might lose these benefits if you cancel the policy before the specified time frame.