Term insurance is a pure type of insurance contract in which the policyholder continues to pay the premium for the set term and the insurer pays the nominee the money insured under the policy if an unfortunate event occurs. Assume you survive the term insurance period and no longer have significant financial commitments. In that situation, the policy’s fixed premium may appear to be a waste, and you should probably invest it elsewhere.
It is a very important feature of a term insurance policy to ensure that the financial support that is provided by the company for your family is protected in the event of an unforeseen event. A term insurance policy ensures that if the breadwinner dies, his or her dependents will be provided with the necessary income to maintain their standard of living.
A Term insurance policy is usually purchased to cover you for a set period of time. Premiums for this type of insurance are often modest, and the coverage includes a simple death benefit with no investment vehicles.
Read : What Is A Term Insurance Policy?
Reasons to cancel a term insurance policy
If you want to cancel your term insurance policy, you should usually contact your insurance company. They will contact you to help with the cancellation process, which may require you to file a written request. You can also get your policy online.
If a premium payment is missed and not made during the grace period, which is the 30- to 31-day period following the due date during which you are still protected, your insurance is terminated.
There are some of the main reasons to cancel the term insurance policy, which are as follows:
- You are no longer financially dependent, which means that there is no beneficiary to be nominated.
- You’ve cleared all of your debts, and you don’t need any insurance for debt repayment.
- Your financial condition becomes so poor that you cannot afford to pay the premium amount.
- You find that investing money in term insurance is not so beneficial, and you wish to invest that money in a higher-yielding account or portfolio.
- You wish to invest more aggressively.
- You are in need of collecting the cash value component of your coverage.
- You’ve quit smoking or your health has improved, and you’ve been offered a lower rate on a new life insurance policy.
Free-look period
The free-look period is a set length of time provided by your insurer to enable you to thoroughly understand your new insurance policy immediately after purchasing it. If you have any questions regarding the benefits stated or wish to better understand the policy, you can contact the insurer during the free look-around time. You can proceed with the policy once you have obtained the necessary clarity. If you are dissatisfied with the policy, for example, if the plan’s terms and conditions do not match your expectations, you can cancel it and receive a refund of your paid premium (subject to certain deductions). Your free-look time typically lasts 15 days after you receive your policy.
Things to Consider When Cancelling Your Policy
- The free-look option is only accessible when a new policy is issued, not when existing insurance is renewed.
- Insurance companies will provide you with a free look period if you haven’t made any claims in the first 15 days of your coverage.
How to cancel your term insurance policy?
Log in to your insurance company’s customer portal, go to the policy cancellation section, and then follow the steps. Prepare to provide insurance details as well as personal information for verification. Keep in mind that the conditions and procedures for cancelling a policy may differ depending on the insurance company.
Cancelling your term policy is easy, as it does not require a lot of paper work. You simply need to follow some of the below-given instructions:
- Review your policy. Read your insurance policy thoroughly so that you can better understand the cancellation restrictions, any fines, and the specific cancellation process. This will help you proceed with the process of cancellation.
- Contact your insurance company or agent: After making up your mind to cancel the policy, you should contact your insurance company or the person who sold you the policy. You can find the contact information of your insurer on your policy documentation or on their website.
- Discuss with the service provider: Most life insurance companies will allow you to cancel or initiate the cancellation process over the phone. If you have your policy number handy, a professional can assist you through the steps.
- Write a Letter: If you want to cancel your policy, you must notify your insurer in writing. In addition to filing a stop-payment order for the premiums, as some policies require, you can submit a very simple letter.
- Request cancellation: Inform the insurance company or agent that you wish to cancel your term life insurance policy. Give them your policy information, including the policy number, your name, and any additional information that is requested.
- Follow their instructions: The insurance provider or agent will walk you through the cancellation process. They may require you to submit a written cancellation request or fill out particular forms. Follow their directions attentively and complete any paperwork that is required.
- Confirm cancellation and receive documentation: Once the cancellation process is complete, request formal confirmation from the insurance company that your policy has been cancelled. This paperwork should be kept for your records.
- Stop paying the premium on the term insurance policy. Simply cease paying your premiums and notify your insurer in writing or by phone that you are cancelling the policy. Check your insurer’s website as well; there may be a form you can use to cancel your insurance there.
- Verify premium payments: Make sure that all automatic premium payments are cancelled or suspended so that you are not charged for the coverage in the future.
- No cancellation penalty: There are no costs or penalties for cancelling a term life insurance policy, no matter how you do it.
It’s crucial to remember that the actual methods and requirements for cancelling a term life insurance policy may differ depending on the insurance company. Some businesses may have special cancellation times or procedures, so it’s important to check and clarify your policy.
Conclusion
If you decide to cancel the insurance, you must notify the insurer during the free-look time, either through their customer service department or by visiting their headquarters. Note the date you received the policy paper because the free-look period begins on the date you received the policy document. The free-look period does not apply to renewals or claims made within 15 days of purchasing the policy. Please keep in mind that the insurer may deduct some fees before refunding your payment. If you have dependents or shared debts, you should always obtain term insurance. However, there are compelling reasons to reconsider cancelling your policy. You could, for example, look for less expensive coverage elsewhere or assume the policy isn’t required.
