What Happens When I Cancel Life Insurance?

When you cancel your Life Insurance policy, your life insurance coverage ends.

You are not only giving up your life insurance coverage you purchased but you may also be giving up your insurability and the guaranteed cost of your life insurance.

When you’re cancelling a term life insurance policy, that’s the end of it, there is no more coverage and you get no money back from your policy.  They do not have any cash value.  However, a life insurance carrier may return a pro-rated portion of the last premium payment you made if you canceled it before the life insurance policy lapses, but that will vary by carrier.  Most people will just not pay the premium when it is due and allow the life insurance policy to lapse on its own.

If you’re terminating a permanent life insurance policy, there may be some cash value inside the policy to be collected. The cash value of a permanent life insurance policy is subject to surrender charges, which depends upon the structure of the policy and how long your life insurance policy has been in force.