How to Cancel Your Life Insurance Policy (2024)

FAQs

How to Cancel Your Life Insurance Policy? ›

Cancellation is straightforward with a term life policy. You should contact your life insurance company with a written notice and advise them you are ending the policy. You can also simply stop paying premiums to get the same result.

Start by evaluating your reasons for cancelation and considering how important life insurance coverage is to you. If you decide you don't need life insurance anymore, you can contact your insurance provider and inform them of your decision to terminate the policy. You may need to fill out a cancelation form.

Sample Insurance Cancellation Letter

I'm writing to seek termination of my insurance policy, which will take effect on [enter cancellation date]. I'd appreciate it if you could provide me formal confirmation of the cancellation within the next 30 days.

If you decide to cancel coverage, make sure to take the proper steps to ensure that you don't have a gap in coverage. Reasons you may decide to cancel car insurance include finding cheaper rates with another insurer, moving to a new state or even having an unpleasant experience with your current insurance company.

If you lose your job, get divorced or otherwise experience financial hardship, you may no longer have room in your budget for your life insurance policy. Although some policies give you flexibility to weather these tough times, canceling due to financial hardship is a valid reason to let a policy lapse.

In most cases your premium payments will be forfeited, and you will not receive anything for your previous payments. The one exception to this is if you have whole life insurance and cancel it. You may have built up equity for all of the payments you have made so you may receive a lump sum payment from your insurer.

Cancel a business contract by writing a letter stating your intentions, explaining why, and including a final payment for services. End on a friendly note. Use a less formal format to cancel a major event. Inform the receipt of the cancellation, apologize for the inconvenience, and thank them for their help.

There are three common cancellation methods of cancellation: pro-rata, short-rate, and flat rate. Pro-rata cancellation refers to policy termination earlier than its maturity, either at the request of the insured or at the behest of the insurer.

While you'll want to check your policy for details, most policies require you to contact your insurance company or your insurance agent. You may have to sign paperwork confirming your surrender. Once the process is in motion, you likely won't have to do much but wait for the surrender value check.

How do I write a letter to surrender a life insurance policy? ›

I am _____________ (your name) holding an insurance policy having policy number ________________(policy number) from your company ( insurance policy company name). All the premiums are paid till date and due to_____________________ (mention the reason of surrender), I would like to surrender my policy.

Some insurance companies permit you to cancel right over the phone or online. Other insurers may require written notification or a signed document. Generally, insurers will refund you the money for the unused portion of your policy, assuming you paid in advance.

Insurance companies have different rules for how to cancel, but typically you start things off with a phone call. Your insurance agent might also ask you to submit a request for cancellation in writing for the company's records.

You can cancel term life insurance by stopping payments or contacting your provider — and you won't have to pay fees or penalties for doing so. Canceling a whole life policy requires a conversation with your insurance company. Katherine Murbach.

Your policy's cash surrender value is its cash value minus any administrative or otherwise additional fees. While you will not receive a bill for canceling your policy, you can expect some money to be subtracted from your final payout.

You won't be taxed on the entire surrender value, though. You'll be taxed on the amount you received minus the policy basis, or the total premium payment you made on the policy. This taxable amount reflects the investment gains that you took out.

Fortunately, it's easy to calculate your cash surrender value. First, add up the total payments you've made toward your life insurance policy. Then, subtract the surrender fees your insurance company will charge. You'll be left with the actual payout you may receive if you terminate or surrender your life insurance.