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What to do when you don’t need or want your independent disability insurance policy anymore.
Maybe you’ve decided you no longer need disability insurance, or maybe you never wanted it in the first place. Maybe you’ve looked at your budget and decided disability insurance is the piece that doesn’t fit, or maybe a windfall has ensured that your income is no longer required.
Before you cancel your independent disability insurance, there are some things to consider.
Decided and set? It’s easy to cancel.
Read on to find out:
There are several reasons why you might consider canceling your disability insurance policies. Some are better reasons to cancel than others, but here are the most common:
Canceling your disability insurance coverage is not a small choice, and not just because signing up for one can take a long time and involve a medical exam. If you do decide that you want coverage again in the future, the process will take a long time, yes, but also, that new medical exam combined with your new rates, will determine your new rates.
Disability insurance is meant to replace your income when you become disabled.
Canceling your disability insurance is easy: you simply stop paying your premiums. If you pay premiums annually and you want to cancel after you’ve paid the year’s premium, contact your insurer to cancel — you should be able to get a prorated refund.
And that’s it — if you stop paying your premiums, after a grace period set by your insurance company (usually 31 days), your policy will be terminated. You can no longer make a claim against it, and you will have forfeited all paid premiums, but you will have canceled your disability insurance.
If you change your mind, you’ll likely have to apply for a new policy, but it’s worth contacting your insurance company to ask about reinstatement: some companies may reinstate the policy if you pay back all past due premiums.
Some people are also worried about whether their policy could be canceled by the insurer. Most policies are guaranteed renewable, which means your insurance company cannot cancel your policy as long as you pay the premium. As long as you are honest with your insurance company during the application process and continue to pay your premiums, you needn’t be worried about your benefits being canceled.
If you’ve filed a claim and are receiving benefits, there are some things that can trigger a review and cancellation of benefits, however:
And it’s also important to note that, even if you follow all the rules, your benefits don’t last forever. In fact, your insurance contract will stipulate when your benefits expire. For some policies, it’s when you reach age 65 (at which point you can start collecting Social Security). Other policies have set benefit periods — 2, 5, or 10 years — that you choose when you sign up for the policy.
Consult your policy or talk to your insurance company to find out what requirements you must meet to keep your disability insurance policy active.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.