There can be a number of reasons to cancel a life insurance plan. The reason could be a financial crisis or an urgent need for money. One can have any number of reasons, but irrespective of any reason, it is fairly easy to cancel a plan. The following the process is a guide to this procedure:

Visit the official website of the insurance company from where the life insurance policy was bought.

Irrespective of the fact that whether the life insurance is from a large national company or some regional insurance provider, visit the provider’s official website in order to check the cancellation procedure. The website address can be found on any of the correspondence pieces received from the insurance provider. Also, look for the website on the internet using the name of the insurance provider.

Getting in touch with a Broker

Before proceeding with the life insurance policy cancellation, it is suggested to get hold of an experienced broker to clear all the doubts and check whether this is the right decision. It will help one in understanding whether this will reap good results.

Getting hold of an Accountant

Canceling a life insurance policy can leave a door open for taxes implications. Excess premiums and earnings assist in building a financial corpus for whole life policies. When one cancels a policy, the insurance provider sends them a cheque with a certain amount. This sum may or may not be eligible for tax exemptions. Hence, it is necessary to consult a seasoned tax guru as she/he can resolve all the queries about tax implications linked to the cancellation of a life insurance scheme.

Take partial withdrawal plans into consideration

If it is a universal life insurance policy, then partial withdrawal of sum assured is allowed without complete cancellation of the policy. With partial withdrawal, the policy will free up a certain sum of money that can be used immediately, and in the meantime, some money can still be left in the policy to cover the insured’s family. Nevertheless, a partial withdrawal is like taking a loan against a policy and can have certain consequences.

Steps Involved:

1. The policyholder should get in touch with the life insurance company and request for policy cancellation.
2. Typically, the company will offer various alternatives & insurance solutions to the policyholder.
3. In case the policyholder is happy with offered alternatives, he/she won’t have to cancel the policy.
4. In case the policyholder wants to cancel the life insurance plan anyway, he/she needs to download the plan cancellation form the official website of the insurance provider.
5. The policyholder must duly fill the policy cancellation form and attach/upload the required documents (if any).
6. The company will initiate the policy cancellation process.

Note- The policyholder isn’t entitled to any refunds if he/she cancels the plan after the cooling-off period.

Reason for Cancellation

Before a policyholder proceeds to cancel his/her life insurance plan, he/she must analyze the reason behind this cancellation. The decision to cancel a life insurance plan is a major one. When a plan is canceled, the insured loses the insurance coverage.

If a policyholder decides to cancel his/her plan because he/she has come across a better plan, this can be considered as a valid reason for cancellation.

Cancellation Refund

Every best life insurance plan comes with a grace period/cool-off period which enables the policyholder to assess his/her insurance expectations. It gives him/her the time to make sure that the insurance plan is the best for him/her. In case a policyholder cancels his/her policy during the grace period, he/she will be offered a refund. Also, she/he won’t have to pay any additional fee.