How to cancel life insurance
You may be considering cancelling your life insurance policy if you believe you no longer need it. For example, if you took out the policy mainly to protect your mortgage repayments in the event of your death, but then inherit a significant amount that enables you to completely pay off your home loan, you may decide you no longer need life insurance cover.
Just remember, however, that even if your original reason for taking out the policy no longer stands, life insurance still offers your family some extra financial security if anything happens to you. If you cancel your policy, your family will lose this financial safety net – and if later you decide to take out a new policy, the cost of cover could be higher than it is on your existing policy.
Equally, you may just want to cancel your existing policy because you've found a better deal from a rival insurance provider.
Cancelling without taking out alternative cover
If you're considering cancelling your life insurance policy just because you feel you can no longer afford it, think about whether you can manage without cover. Difficulty paying life insurance premiums could suggest that you really do need the cover – in the event of your death and the absence of your income, your family would struggle even more.
You may consider cancelling on a temporary basis, with plans to take out a new policy at a later date– but this can prove to be false economy because premiums are usually cheaper the younger and healthier you are, and you may face a significant price hike if you leave it a few years before securing a new one.
How to cancel
You may weigh up all the factors and decide you still want to cancel your policy. If you only just took out the cover, you will usually have a 'cooling off' period (often 30 days) during which you can easily cancel. Read your policy's terms and conditions to find out how long this cooling off period lasts. If you cancel after this point, write to the insurance company informing them that you want to cancel, and if you pay by direct debit you will need to cancel this with your bank. You will not be entitled to a refund on any premiums you have already paid, but you should not be charged for cancelling.
Alternatives to cancelling your cover
Call your insurance provider and tell them you're finding it difficult to pay your monthly premium, and they may offer you a temporary reduction in your monthly payments in return for a lower level of cover. You will still have a degree of financial protection, but at a more manageable monthly cost – then you can switch back to a higher level of cover when you can afford it.