How to cancel your life insurance policy

Thinking about letting go of your life insurance policy? Here’s a step-by-step guide on how to cancel your life insurance.

There are many reasons you might want to cancel your life insurance policy. Some reasons make good financial sense (like if you’ve paid off your loans and no longer need a policy to cover them) and some don’t (like if you want to spend your monthly premium payments on takeout instead).

Canceling your life insurance policy can be as simple as calling your insurance provider or skipping your payments. But the impact of canceling differs depending on how long you’ve had your policy and whether you have term life insurance, which is simpler to cancel, or whole life insurance, which might come with cancellation fees.


  • You can cancel a life insurance policy at any time, either by halting payment or calling your insurer

  • There may be penalties for canceling permanent life insurance during the first several years of the policy

  • Unless you cancel your policy during the free look period, you’re unlikely to get a refund on your premiums

  • If you cancel a whole life policy you may receive a cash value amount, which could be subject to taxes and fees

How to cancel your life insurance policy

Canceling term insurance is generally much simpler than canceling whole insurance. With either type, you can cancel your life insurance policy at any time, but when you cancel your policy affects whether you’ll be able to get any of your money back.

Canceling during the free look period

If you immediately regret your life insurance purchase, you can cancel it without penalty or cost if you’re still within the free look period, which is the time immediately after buying a life insurance policy. If you cancel during the free look period, any premiums you paid will be fully refunded.

Free look periods are between 10 and 30 days, depending on your insurer and regulations set by your state. After the period ends you lose any premiums paid if you cancel your policy.

How to cancel your term life insurance policy

There are a few ways to cancel a term life insurance policy.

1. Stop paying premiums. If you don’t pay your premium within the grace period — the 30-31 days after your premium payment due date during which you can delay your payment without losing your coverage — your insurance is canceled. That’s usually a bad thing, but if you want to cancel your term life insurance policy, it’s that easy: just don’t pay.

2. Write a letter. Provide written notice to your insurer that you’d like to cancel your policy. Some policies detail in their contracts that issuing a stop-payment order for your premiums is considered written notice, but you can also write a very simple letter.

Below is an example of a term life insurance policy cancellation letter:


I’m writing to cancel my policy, effective DATE.

My policy number is POLICY NUMBER.

Please return any unused premiums to ADDRESS.

Sincerely, NAME

3. Call your provider. Most life insurers can cancel your policy over the phone, or at least get the process started for you. Have your policy number handy and your insurance agent should be able to guide you through the steps.

How to cancel your whole life insurance policy

Canceling a whole life insurance policy is more complicated than just stopping payments. Each policy has slightly different forfeiture rules, but generally, canceling whole life insurance starts with a call to your insurer. What happens after that will depend on how long you’ve owned the policy and your insurance company’s rules, but there are usually three options:

Cash out the policy, if possible

One of the appeals of whole life insurance is that it has a cash surrender value. The first several years of your whole life policy are the surrender period. The exact length of the period will be set in your policy, but it can be a decade or more. If you cancel during this period, your insurer will take a percentage of your cash value as a penalty or keep the entire sum.

And while your policy’s death benefit isn’t taxable income, cash value from a policy that you cancel is taxable, meaning any payout from the cash value will be taxed as income.

Reduced paid-up option

Some insurers offer a reduced paid-up option, which allows you to stop paying premiums and keep a reduced death benefit on your whole life policy. The amount of your reduced paid-up death benefit is based on your age, the amount of cash value attached to your policy, and the total premiums you’ve already paid, and will probably be significantly smaller than your policy’s original death benefit.

Let it lapse

If you stop making payments, some insurers will automatically cash out your whole life policy; others will let the policy lapse. Your insurer may offer this as an option, but in either case, you could face the same penalties as you would if you surrender your policy, depending on how long it’s been in force.

However, other types of permanent life insurance, like universal life insurance, will start using your cash value to fund your premiums if you stop paying your bills. This depletes the payout you’d get from canceling the policy, so letting whole life insurance lapse is probably not the best way to end your coverage.

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

Whether you’ve been paying life insurance premiums for months, years, or decades, you’ve put a lot of money toward your policy. Will you get any of it back? The answer is, probably not. Here’s what happens after you cancel a life insurance policy:

You forfeit your premium payments

Once you cancel your life insurance policy, you will not get back any of the premiums you paid. If you have a term life insurance policy, you won’t get a refund if you cancel your policy or let it lapse. Whole life insurance policies may pay out the cash value when canceled, minus penalties and fees, but not a refund of premiums.

The one exception: If you cancel your policy mid-payment cycle, you may be refunded unused premiums — premiums that paid for any days between the date of cancellation and the due date of the next premium.

You lose life insurance protection

When you cancel your life insurance policy, you are also forfeiting your current rates while leaving your beneficiaries without financial support if you die. If you decide you want life insurance coverage in the future, you have to go through underwriting again, meaning that your premiums could be higher due to changes in age or health.

Reasons to cancel life insurance

There are many reasons you might consider canceling your life insurance policy.

  • You no longer need it (for example, your kids are out of school and your mortgage is paid off)

  • You can no longer afford the premiums

  • Buyer’s remorse

  • You have a permanent life insurance policy and want to separate your retirement investments from your life insurance

  • You want to access the cash value of your life insurance policy

  • You have found life insurance coverage at a better price

Can your insurance company cancel your life insurance policy?

Your insurance company can only cancel your policy in very specific instances detailed in your policy.

Reasons your insurer might cancel your coverage include:

  • Non-payment of premiums: If you don’t pay your premiums within the grace period, your policy will be terminated.

  • Fraud: The first two years that your policy is active is called the contestability period. During that time, the insurer reserves the right to investigate your cause of death and to cancel your policy if it finds that you lied on your application.

Your insurance company cannot cancel your policy for any other reason, including if you gain weight, start smoking, develop a dangerous hobby, or get sick.

Group life insurance

One exception is that your group life insurance policy can be canceled by your employer at any time if they choose to stop offering the coverage. Additionally, your coverage through the group policy will terminate when you leave the job that provides it.


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Alternatives to canceling life insurance

If you still need life insurance but want to cancel your life insurance policy because your premiums are too high, there may be a way to change the terms of your policy without canceling, depending on the type of life insurance you have.

Before you cancel your life insurance policy, it’s worth considering your alternatives:

  • Lower your coverage amount. Most insurers will let you decrease your coverage amount at least once, which can reduce your premiums.

  • Ask for a new medical exam. If you’ve lost weight, quit smoking, or made another significant lifestyle change, you could qualify for lower premiums. Most life insurance companies offer reconsideration once you’ve had your policy and maintained your lifestyle improvement for at least a year.

  • Arrange for the cash value of the policy to pay for the premiums. If you have a whole life insurance policy with a cash value, you may be able to use the cash value to cover your premiums.

The steps for canceling your life insurance are straightforward, but the impact of canceling your policy may not be. Before you end your coverage, confirm that your loved ones will be protected once your policy is canceled and what the potential penalties are. Your insurance agent or broker can walk you through cancellation or suggest more manageable alternatives to terminating your policy.

How to cancel your life insurance policy FAQ:

How do I cancel my life insurance policy?

You can cancel a term life insurance policy by stopping premium payments and letting the policy lapse or by contacting your insurer by phone or mail. To cancel whole life insurance, call your insurer directly to discuss whether a policy surrender, reduced paid-up option, or policy lapse is your best option.

Can I cancel my life insurance policy at any time?

You can cancel term life insurance at any time without incurring any penalties. Canceling whole life insurance within the policy’s surrender period will result in a penalty, often subtracted from your policy’s cash surrender value.

Do I get my money back if I cancel my life insurance policy?

You do not get money back after canceling term life insurance unless you cancel during the policy’s free look period, in which case you’ll receive a refund of any premiums you’ve already paid. You may receive some money from your cash value if you cancel a whole life policy, but it will be taxed as income.

What happens when you cancel a life insurance policy?

After you cancel a life insurance policy, you give up the premiums you’ve paid into the policy and your beneficiaries won’t receive the life insurance pay out if you pass away.

Why should I cancel my life insurance policy?

You may want to find a new policy or cancel your current coverage if you have buyers’ remorse, can’t afford your current premiums, or want to change the type of life insurance you have. If you’ve paid off your debts and no one relies on you financially, then you may want to cancel your policy to redirect your premiums toward savings or investments.

Life Insurance Expert

Amanda Shih

Life Insurance Expert

Amanda Shih is a life insurance editor at Policygenius in New York City. She has a passion for making complex topics relatable and understandable, and has been writing about insurance since 2017 with specialities in life insurance cost and policy types. She's previously written for Jetty and LegalZoom.