How to Cancel Term Insurance
  • How to Cancel Term Policy?
  • Step-by-step Guide
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How to Cancel Term Insurance
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How to Cancel a Term Life Insurance Policy Online?

In a fast-paced world where everything is digitalized now, even many insurance tasks can be completed conveniently online, and canceling a term life insurance policy is no exception. We all understand that life circumstances and financial needs can change with time. While the process of canceling a term life insurance seems daunting, you can make it hassle-free with the right information and guidance. This article will walk you through the steps to cancel a term life insurance policy online.

Ways to Cancel Your Life Insurance Policy

There are two ways to cancel your term insurance plan either during the free-look period or surrender your policy.

  1. Cancellation during the free-look period

    Every term insurance plan comes with a 30-day free look period. In case you are not satisfied with your policy you can cancel the same within the free-look period without paying any charges.

  2. Surrendering your policy

    In case you wish to cancel your term insurance policy after the free-look period, you can surrender it. The surrender value is the amount paid by the company once the policy matures. If the policy is surrendered before five years of policy purchase the insurance company may charge you surrender fees. In case you surrender your policy after five years the insurer will not charge you any amount.

    Surrender value is not available with term insurance plans.

Steps to Cancel A Term Insurance Policy

To cancel your term insurance plan online you should follow the below-mentioned steps. 

  • Understand the policy

    Before you process the cancellation of your term life insurance policy, it is necessary to understand and why you are considering policy cancelation. Also, do check your surrender value, which is the amount that you will be receiving upon cancellation, minus any penalties that are going to be charged.
  • Gather all the required information

    You need to collect all the necessary policy information, such as policy number, name of the policyholder, date of birth, and contact details. Along with these documents, you must also have a valid government-issued identification as you may need to provide it for the verification process.
  • Explore the online portal

    Most of the insurance providers offer the option to cancel the term life insurance policy through their website or online portals. You can explore the website yourself or call an expert for assistance.
  • Initiate the policy cancellation

    When you access the portal using your policy information, you might need to provide your identity details. Give the reason for canceling your policy and submit the request.
  • Document submission

    After you initiate the cancelation, you need to submit the necessary documents to support your request. The most common documents that will be required are identity proofs, policy documents, and filled-out cancellation forms. Make sure that all the documents are clear and legible to avoid delays in the process.
  • Confirmation

    You will receive the confirmation mail from your insurance provider after submitting all the documents successfully. This mail will confirm the effective date of cancellation.
  • Financial implication

    After the submission of your documents, and the approval of cancellation, your refund will be initiated by the respective insurer. Although the amount can vary. You need to understand any potential tax deductions associated with the refund.It is necessary to inform your beneficiary about your decision to cancel your term life insurance policy. Your decision will impact their financial status as well, especially if they are relying on you

When You Should Cancel Your Term Life Insurance Policy?

You should cancel your term insurance policy under the following circumstances:

  • You cannot afford the premiums

    If you are not able to afford your term life insurance premiums and have no other option left then you should opt for policy cancellation.
  • Your financial requirements changed

    In case your financial goals or requirements have changed and the current plan does not fulfill the same, then you can consider canceling your term life policy.
  • You found a better plan

    If you have found another better plan that fits your needs and fulfills your requirements then you can consider canceling your current plan.

Conclusion

Practically canceling your term life plan is not an ideal decision. It is the last option you should consider. Canceling a term life insurance policy online is not a complicated process. You just need to understand your policy and its terms and conditions. By exploring and seeking guidance from the expert you can easily do the process. 

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FAQs: Canceling Your Term Life Insurance?

1. Can I cancel my term life insurance policy at any time?

Yes, most term life insurance policies can be canceled at any time. But, it is essential to understand the potential financial consequences before proceeding.

2. Will I receive a refund if I cancel my policy?

You will receive a refund depending on your policy and its terms, you will receive a refund of the premium paid minus any applicable fees or penalties.

3. What happens if I discontinue term insurance?

If you do not pay the premium amount on time, then the plan will lapse and will not provide any benefits.

4. Is it a good idea to cancel term life insurance?

Cancelling life insurance is not a good idea, as it is hard to get a new one. However, it might be worth it if the coverage is no longer required.

5. Does term insurance have a surrender value?

Term life insurance is less expensive. But it only lasts for a limited period of time. Term policies does not build cash value, so there is no cash surrender value either.

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Himanshu Kumar

Written By: Himanshu Kumar

Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.