Will I get a refund if I cancel my life insurance?
There is one occasion in which you can get a refund if you cancel your life insurance.
Under the Financial Services Regulations 2004, all insurance policies come with what’s called a cooling-off period – for life insurance, this is 30 days. This means that after you take out a policy, you cancel completely free of charge within this period.
Unlike other forms of insurance, if you cancel a life insurance policy you won’t have to pay off the rest of your term and you won’t be charged for cancelling early. However, you won’t be reimbursed for any premiums you’ve already paid either.
Carefully consider whether cancelling is the right option for you. In some cases it might be, for example if you’ve inherited a sum that’ll pay off your debts, negating the need for insurance. However, if you’re thinking about cancelling due to financial reasons then we strongly recommend caution…
Weigh up the potential cost to your loved ones if they’re not provided for should the worst – it’ll likely outweigh any premium. In some cases, insurers may decrease your monthly payments for a reduced level of cover for that period instead, which you can then reinstate when you are financially able to. But all in all, remember that if you cancel your life insurance and then take out a future policy, you’ll almost certainly face higher premiums due to the fact you’re older.
Vitally, each policy will likely have its own regulations on cancelling and refunds, so you should make certain you check the terms and conditions or simply contact your insurer.