Life insurance advice – Can you cancel life insurance?
Life insurance is arguably the most important policy you can own, offering financial security for your loved ones in the event of your passing.
Despite its importance, situations may arise where you feel you no longer need (or can no longer afford) to pay for life insurance – the good news is that this is entirely possible, though not necessarily recommended.
If you can no longer afford to pay for life insurance, cancelling is a drastic option which could have a severe impact on your family’s future – why not head over to a life insurance comparison website like Confused.com to see if you can find a cheaper premium?
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Another reason people may want to cancel their life insurance policy is perhaps because they’ve seen a cheaper quote or better deal elsewhere, in which case, having your policy reviewed is also an option.
A life insurance broker can review your current policy and situation to identify whether or not the level of cover you have is sufficient, or whether you need more or less cover than you already have. An insurance broker will be able to scour the market to find you the best deal - one that has the right level of cover suited to you.
What happens when you cancel a life insurance policy?
With the cancellation of your life insurance, you instantly lose every single potential benefit attached to your policy – this means that if you were to pass away, your family could be left in financial trouble while trying to pay for things like a mortgage, your funeral and day-to-day living costs, on top of grieving for their loss.
Before you consider cancelling your life insurance policy, make sure that you are confident that it is the right decision – review your financial responsibilities and assess whether or not your family could cope without your income. If the answer to that is ‘no’ then you would be taking a huge risk by cancelling your life insurance – particularly when it usually costs no more than a Netflix subscription!
Reasons for cancelling life insurance
There are a number of reasons that people might decide to cancel their life insurance policy. These include:
- You receive an unexpected windfall (such as inheritance) which has paid off your mortgage
- You have paid off a loan/mortgage earlier than expected
- Your circumstances change (divorce etc.)
- You get a new job which comes with life cover
- You can no longer afford it
What is important to remember is that, even if you no longer feel like life insurance is a necessary policy for you, it is still guaranteed to provide your family with financial support in the event of your death.
For example, if you had taken out life insurance for a mortgage which has since been paid off, your family will still receive that payout and could put it towards covering other costs.
Read more: Level term vs decreasing term life insurance
If you find that you can no longer afford your life insurance policy, your first port-of-call should be to see if you can get a cheaper quote – even if you have to make some adjustments such as a decreased payout, a smaller life insurance policy is better than no life insurance policy.
If I cancel life insurance, do I get my money back?
Typically, life insurance policies do not hold any monetary value until they are required to be paid out. This means that if you cancel your life insurance policy, you will not be entitled to a refund of any money that you have already paid – you will no longer have to pay your monthly premiums, but that’s just about where your savings end.
If you cancel your policy within the 14 day cooling off period (which is a legal requirement for all companies), you will be entitled to a refund of any money that you have paid as long as you have not already made a claim – in this case, there may still be a cancellation fee for cancelling your life insurance.
How much is life insurance?
Realistically, life insurance is a very affordable policy with quotes for as little as £5 a month available when using price comparison websites like Confused.com.
Whole of life insurance tends to be more expensive as it is guaranteed to pay out, given that it lasts for the entire length of your life. Level term and decreasing term life insurance are usually slightly cheaper as your insurer will be hoping that you outlive the length of your policy term and will not have to pay out a lump sum.
Read more: The average cost of life insurance
Can you suspend your insurance?
Yes, some life insurance providers will allow you to temporarily suspend your life insurance policy for a period of time. This means that you won’t have to continue making monthly payments during the given time period but also won’t have to cancel your policy entirely – this would be a good option for somebody who has lost their job, or is experiencing a temporary fall in income.
Remember, though, that while your cover is suspended, you will not be insured. If you pass away during this period, your family will not receive a payout. If you can, you should always continue paying life insurance.
Where should I get a life insurance quote?
To find the best life insurance quote for you and your circumstances, you should visit a price comparison website like Confused.com – not only will you be able to find the cheapest quote, but you’ll also get the chance to scour through the suggested policies to find one that suits you.