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How to cancel your life insurance

Fact-checked with HomeInsurance.com

When planning for their future, some people purchase life insurance to protect them for a set period of time, while their children are young or to make sure they’re financially provided for through the college years, for example. But what happens if you outlive your life insurance policy or your needs have changed? Is the cancellation of an insurance policy possible? This article will explore in further detail, but typically the answer is “yes.”

If you recently signed up for life insurance and you’ve changed your mind, most states have what’s called a “free look period,” which allows you to try the insurance out and cancel within a certain time frame if you desire. You’ll receive a full refund of any premiums you paid. Depending on the state you live in, the free look period can last between 10 and 30 days. If your insurance policy is older than a month, there are a couple of other ways to cancel life insurance policy, which we’ll explore below. 

Reasons to cancel your life insurance policy

When you purchase a term life policy for 10 to 20 years or longer, a lot can change during that time. Cancelling life insurance (especially term insurance) is a fairly common practice, simply because of the way your life changes. Common reasons for canceling life insurance include:

  • You’ve changed your mind about having life insurance.
  • The dependents you named as your life insurance beneficiaries have passed away or no longer need the financial cushion you were going to provide.
  • Your spouse, who was the sole beneficiary, has passed away, or you’ve divorced.
  • You can no longer afford the coverage.
  • You purchased life insurance from a different carrier.
  • Your new employer is providing you with life insurance coverage.

How to cancel your term life insurance policy

The simplest way to effectively cancel your term life insurance policy is to stop paying your premiums. Once you do, the policy will typically become invalid immediately (although this may vary by provider policies and conditions). You could also ask the insurance company to provide you with an insurance cancellation form or you can craft a cancellation of insurance policy letter yourself to officially terminate your term life policy. 

Of all the methods, letting your term life insurance lapse by not paying it any longer is the easiest, followed by filling out and signing an insurance cancel form. However, this is not necessarily the recommended way to cancel. It can be helpful to notify your insurance company prior to terminating payments so as to avoid any negative repercussions. Here’s a few ways to cancel term life insurance policies directly with your provider:

  • Call your life insurance company.
  • Explain you’d like to cancel the term life policy.
  • Follow their instructions on how to cancel insurance policies; this may include downloading a life insurance cancellation form from the provider’s website.
  • Fill out, sign and date the insurance cancellation form.
  • Fax, mail or upload the form back to the insurance carrier as necessary.

How to cancel your whole life insurance policy

Whole life insurance works differently than a term life insurance policy because there’s a cash value attached. For every month you paid premiums towards your whole life insurance policy, a portion was applied towards the cash value, which belongs to you. To cancel a whole life insurance policy and ensure you receive the cash value component you are owed, it’s best to write a cancellation of insurance policy letter. Include the following information: 

  1. Your name and address
  2. Policy number
  3. Date of cancellation of insurance letter
  4. Brief statement explaining you wish to cancel life insurance coverage
  5. Effective date of when policy should be canceled
  6. Request that cash value be returned; including the mail-to address
  7. Signature

Fax, mail or upload the life insurance cancellation letter and keep a receipt of sending it

Do you get money back when you cancel a life insurance policy?

Term life insurance policies don’t qualify you for any refunds on premiums paid. Once you cancel the term life insurance policy outside of the free look period, the carrier keeps all the premiums you paid.

Permanent insurance policies, such as whole life or universal policies, have a cash value account, which belongs to you. If your whole life policy is fairly new (less than 10 years old), it may still be under the cash surrender period of your policy. The insurance company can keep all (or a large percentage) of the cash value portion you’ve accrued as a penalty, if you try to cancel before the surrender period is over.

If your policy is older than ten years and/or out of the surrender period, it’s likely that you’ll have a significant amount of money due back to you as a refund.

Can your insurance company cancel your life insurance policy?

Under specific circumstances, the insurance company is the one who wants to cancel life insurance. Reasons your life insurance carrier may cancel your policy include:


If you don’t make your premium payments, your life insurance policy will be canceled. One missed payment is enough to cancel your policy, although this may vary by provider if a grace period applies.


If you withheld information during your application, your insurer could cancel you. Carriers have two years to claim fraud and cancel your policy. The first two years after you sign up are known as the contestability period. Companies have a right to look into your application and investigate if they suspect you lied or omitted information.

However, an insurance company is not allowed to cancel you for other reasons than fraud or nonpayment. If your health changes from its original state at the time you obtained the policy, your carrier can’t claim fraud or cancel your life insurance. 

Alternatives to canceling life insurance

Depending on your reason for cancelling life insurance, other solutions may be a better fit for you. Some alternatives to canceling life insurance include:

Converting term life insurance into a whole life policy 

If you’re within the convertible period of your term life coverage, you may be able to upgrade to a permanent life insurance product without the need for further medical exams. While permanent life insurance is more expensive than term life coverage, it may serve your long term goals to upgrade an existing policy if you have the option, rather than securing a new permanent policy and going through the qualification process a second time.

Adjust your coverage 

If your needs have changed or you can’t afford the premiums, you may be able to adjust your policy limits to expand on coverage or reduce it to save money. Rather than cancelling your policy altogether. Speak with the insurer to explore your options before you cancel.

Talk to your insurance carrier about your cash value

With permanent policies, you will eventually pay enough in premiums that you can stop or reduce your premium payments altogether. You may even be able to start applying your cash value towards your premiums. If you can reach this point, you might be able to reconsider cancelling a policy if premiums are your top concern.

The takeaway:

  • Life insurance policies have a “free look period” in the beginning that allows you to cancel penalty-free within 10 to 30 days (depending on the state) and receive a refund.
  • You can effectively cancel term life insurance by no longer paying the premiums.
  • To cancel life insurance when it’s a permanent policy, you’ll likely want to write a life insurance cancellation letter to ensure you’ll receive your cash value component.
  • Premiums are not refunded when cancelling either a permanent or term policy, but you’ll receive the cash value of your permanent and whole life insurance policies, minus any applicable penalties.

If you need to cancel life insurance because you can no longer afford it or your needs have changed, you have a right to cancel. Keep in mind that once you do, you’ll no longer be eligible for a death benefit. Before you cancel, explore what other alternatives there are to continue life insurance coverage. You may find an affordable solution that works for you.

Cynthia Paez Bowman


Cynthia splits her time between Los Angeles, CA and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development.

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