Termination Of Life Insurance Policy: Check Steps & Losses

In the event that the policyholder is unsatisfied with the insurance plan and the benefits offered, then they may choose to end their policy. There are several reasons for this, including high premiums, policy no longer needed, etc. You can terminate your life insurance policy for any reason. If the policyholder cancels their policy during the cooling period, the premiums paid by them will be refunded to them.

How to Terminate a Life Insurance Plan?

Terminating a life insurance policy is not a difficult task. However, the process for cancelling the policy differs based upon the type of policy an individual owns:

A policyholder can terminate their life insurance plan by using the following ways:

1. Inform the Insurance Provider

1. To terminate an existing life insurance policy, policyholders should contact their insurance company. Generally, after hearing the concern of the policyholder, the insurance company presents alternative solutions to the customers.
2. If a life policyholder wishes to terminate the policy, they can download the termination form from the insurance company's official website. Besides obtaining the form from any branch of the insurance company, policyholders can fill it out as necessary.
3. Once the termination form gets submitted, necessary steps would be taken by the insurance company to terminate the insurance policy. In case, the policy gets terminated after the cooling period, no refunds would be made by the insurance provider.

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2. Avoid Paying Premiums

By failing to make the necessary premium payments on a timely basis, the policyholder can terminate the policy without incurring much hassle. The insurance company would terminate the policy automatically as soon as they are intimated about it.

What Happens After Terminating Life Insurance Policy?

After termination of the life insurance policy, the individuals have to bear the following consequences:

1. Loss of Coverage and Benefits

The purchase of a life insurance policy protects an individual's family and themselves. However, after the termination of a life insurance plan, an individual would lose out on the coverage and the benefits that are guaranteed upon buying a life insurance plan.

2. No More Premium Payments

It is rare for a customer to receive a refund after terminating their life insurance plan. Aside from that, they forfeit the premium payment that could have been used for a variety of purposes. Most insurance companies offer the policyholders a refund when they terminate their whole life insurance plans.

3. Go through Entire Buying Process Again

Once the policyholder terminates the life insurance plan but later decides to purchase the policy again, in such a scenario, they are required to undergo the whole policy purchase process once again. The process includes medical examination, doing other necessary formalities etc, which could turn out to be a major hassle for the individuals. Moreover, it could also happen that the rates of the policy goes much higher than before, so one should reconsider prior to terminating a policy.

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Final Words

A policyholder may wish to terminate their life insurance plan for a variety of reasons. Nonetheless, analyzing each factor carefully is important before terminating the policy. The decision to end the plan should be made only after weighing the negative as well as the positive aspects.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.