The choice to opt for a life insurance policy might come up in your mind. Investing in life insurance is a crucial decision, and you should take it very carefully. If you are not happy with your current life insurance policy and want to change it, then you need to cancel the first policy before opting for a new one. If you are canceling a life insurance policy, your agent will tell you about the cancellation procedure.
The question is, is it easy to cancel an ongoing life insurance policy and opt for a new one? Yes, it is. You might want to cancel the life insurance policy because you are not happy with the benefits you are getting. If you want to change your insurance provider and get a better deal from some other insurance provider, you can cancel your existing insurance policy.
There are some points that you need to keep in mind when dealing with the life insurance policy and its cancellation.
What to Keep In Mind When Cancelling the Life Insurance Policy?
The life insurance policy is essentially a contract that states that the insurance provider will offer you financial coverage in return for the insurance premiums you pay from time to time. The insurance premium that you pay is predetermined, and in return, you get a guaranteed death benefit if it is a life insurance policy. The agreement is binding on all parties to the document, but you are also allowed to cancel the policy.
Once you cancel a particular insurance policy, you will not be required to pay the insurance premiums. You will also not be liable to get the benefits linked with the life insurance policy. However, once you cancel a policy, you should look for a better option to increase your financial coverage and protection from liabilities. This will protect your family members and dear ones.
The Process of Cancellation
The process to cancel the life insurance policy is easy, but the ease of cancellation depends on the type of life insurance and the time for which it has been active. You can consult with your insurance agent to start the process of canceling the existing policy under your name.
However, it is interesting to note that some insurance companies charge some kind of monetary penalty to cancel your policy. Look at the penalty amount and see if it is worth canceling. If the penalty amount is too high, there is no point in canceling the insurance policy.
You should ask about the provisions and conditions to cancel the insurance policy before opting for it. Choose an insurance company that allows you to cancel the life insurance policy without any penalty or loss. The idea is to end the contract if there is no meaning to the life insurance policy for your goals.
Money Back After Termination
If you think that after canceling your life insurance policy, you will be able to get the money back, understand that there is a lot of uncertainty around it. Some insurance providers give you your funds back, while others do not. The money you get back and the percentage you can recover depends on the type of life insurance policy you have opted for.
If you have opted for the term life insurance policy and you need to end the contract, then you do not get any money back from the term life insurance premiums. You lose all the money. However, if you opt for the right kind of life insurance policy, like the no-cost term life insurance, you will get the money back, and there will be no additional costs or losses.
The whole life insurance policy is also a type of life insurance that you can cancel and expect some returns. The whole life insurance policy returns the funds that are unused but deposited as a premium. However, there will be some charges, withdrawals, and other expenses that you will lose as deductions.
Canceling a life insurance policy can be easy, but it takes time, and you might lose money because of it. The best approach you can take is to be aware of all the clauses and agreements in the life insurance contract. Take precautions to choose the right kind of life insurance policy that suits your long-term and short-term life goals. If you still go through with cancellation, make sure you are ready for the extra expenses attached to it.