The quickest way to cancel your life insurance policy is to contact your insurance provider. For term life insurance policies, you can also stop making payments and the coverage will lapse. For permanent life insurance policies, it’s best to speak with your insurer or a licensed agent about surrender options, since you could face cancellation fees.
In some cases, if you find you no longer have a need for coverage — like dependents or debts — it might make sense for you to cancel your policy. If your main reason for canceling coverage is affordability, there are ways to lower your premiums without losing your insurance protection. You can speak with a Policygenius expert to find the best option for your circumstances.
How to cancel a term life insurance policy
There are a few easy ways to cancel a term life insurance policy — term life policies don’t have fees or penalties when you cancel, so you can end your coverage at any time.
Stop paying premiums
If you miss a premium payment and don’t pay it within the grace period — usually 30 days after your last payment due date — your insurance will be canceled. You’ll have coverage during the grace period, though, in case you miss a payment by mistake. Your insurer should notify you if you haven’t paid.
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.
Here’s an example of a term life insurance policy cancellation letter:
Sample insurance cancellation letter
Check your provider’s website too — some may have a way to submit notice online.
Call your life insurance provider
Most insurers can cancel your policy over the phone, or at least start the process for you. Have your policy number handy and an agent can guide you through the steps.
How to cancel a whole life insurance policy
Canceling a whole life insurance policy takes more than just stopping payments. Each policy has slightly different rules around cancellation, so start with a call to your insurer. Your options will depend on how long you’ve owned the policy and your insurance company’s guidelines, but here are some common outcomes.
Cash out the policy
Whole life insurance has a cash value account, which earns interest over time. Every policy has a cash surrender value, which is the cash value amount minus fees and penalties. Penalties for cashing out apply during the surrender period, which can last a decade or more. Interest earnings are also taxed as income if you cash out.
Opt for reduced paid-up insurance
This option comes with the fewest fees. A reduced paid-up option allows you to stop paying premiums in exchange for a lower death benefit. The reduced benefit is based on the premiums you’ve already paid, and coverage lasts for life. Even though the death benefit payout is much smaller, a reduced paid-up option doesn’t come with penalties and maintains some amount of insurance protection.
Tax-free exchange
You may be able to exchange your insurance policy for either another life insurance policy or an annuity, according to Section 1035 of the Internal Revenue Code [1] — a process called a 1035 exchange. This option allows you to transfer any investment gains to the new policy without paying taxes on them at the time of the exchange.
It’s best to consult a tax professional if you’re considering this option.
Sell your policy
In some cases, you may be able to sell your life insurance policy using a life settlement company. You’ll have to pay commissions and fees for the service, so depending on the value of your policy, you may not walk away with much money. On the flip side, if you make a profit on your policy, the payout you receive is subject to income tax.
This process can be complicated and it doesn’t make financial sense for everyone, so it’s best to consult a trusted financial advisor before considering this option.
What happens if you stop paying whole life insurance premiums?
If you stop paying your whole life insurance premiums, you’ll typically have a 30-day grace period before your policy will lapse. However, depending on how long you’ve had the policy, you may face surrender fees. If you can no longer afford your premiums, it’s best to contact your insurance company to reduce coverage or at least take note of the fees you’ll need to pay.
What if I can’t afford my premiums or need to access my cash value?
In either case, you’ll need to contact your insurer. If you can’t afford your premiums, you can look at several options including opting for reduced paid-up insurance. You’ll have lower premiums moving forward in exchange for a lower death benefit.
If you need to access your cash value, you’ll need to contact your insurance company. You can discuss your options to take either a loan or a withdrawal. If you withdraw from your cash value, your death benefit will typically be reduced by that amount.
Do you get money back when you cancel a whole life insurance policy?
It depends on your insurance company’s guidelines around surrender fees — some companies charge some degree of surrender fees for up to 10 years. Usually the longer you’ve held a policy, the less you’ll pay in surrender fees.
When you cancel your whole life policy, you’ll get the cash surrender value. The cash surrender value is your total cash value minus any fees.
When to cancel your life insurance policy
If you no longer have a need for insurance, you can cancel your life insurance policy — this can apply to both term and whole life insurance. Canceling a policy might make sense for you if you’ve reached retirement and are able to self-insure, if you’ve paid off a mortgage or other debt, or if you have adult children who are financially independent.
If you’re considering canceling because you can no longer afford your premiums, it’s best to connect with your agent or insurance company first, since you can oftentimes lower coverage or take other measures to adjust your premiums first.
Canceling during the free look period
Life insurance policies typically have a free look period of 10 to 30 days after you put your policy in force. During this time, if you decide you no longer want the policy, there’s no penalty for canceling.
Canceling after the surrender period
If you cancel your whole life policy after the surrender period, you won’t have to pay surrender fees. At this point, you’ll receive your remaining cash value, and your coverage will be canceled.
Things to consider before canceling life insurance
Check with your beneficiaries
If you’re thinking you no longer need coverage, it’s important to check with your spouse, children, or other beneficiaries to update them and confirm they wouldn’t struggle financially in your absence.
Consider any health conditions
Have you developed any health conditions or experienced lifestyle changes that would make it more expensive for you to buy a new policy? If so, it might be worth keeping your existing policy or reducing coverage before canceling.
On the flip side, if you’ve improved lifestyle habits or gone through positive health changes since purchasing your policy, you may be able to get more competitive rates with a new one. This will depend on your age and how long you’ve had your policy. A Policygenius expert can help you compare quotes for free.
Consider surrender fees
As stated above, it’s important to be aware of your insurer’s guidelines regarding their surrender period and surrender fees before canceling your whole life insurance policy. If you have a term life insurance policy, you won’t have to worry about surrender fees.
Alternatives to canceling life insurance
Canceling your life insurance policy isn't advisable if anyone still counts on your financial support. Ending your coverage not only leaves your loved ones unprotected — it also forfeits your current rates. If you decide you need a policy in the future, your premiums will be higher.
If your policy no longer fits your needs or budget, there are ways to lower your premiums or adjust your coverage without completely losing life insurance protection.
Arrange for the cash value of the policy to pay your premiums. If you have a permanent policy, you may be able to use the cash value to cover your premiums until you can afford to pay them out-of-pocket.
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 positive lifestyle changes for at least a year.
Lower your coverage amount. Most insurers let you decrease your coverage amount at least once, which can make your premiums more affordable and help you customize your coverage to your current financial obligations.
Shop for a new policy. It's possible that your current policy needs or health improvements could earn you lower rates with a different insurance company. Work with a broker to compare quotes and replace your existing policy.
A life insurance agent can walk you through the best option for your circumstances and help you make any necessary adjustments.
How to cancel life insurance with popular providers
No matter your life insurance provider, the quickest way to cancel life insurance is to contact your insurer. If you purchased a policy through Policygenius, you can contact us, too, and we’ll help you cancel.
Below are a few popular providers and their contact information.
Canceling a State Farm life insurance policy
You can contact State Farm at:
Canceling a Northwestern Mutual life insurance policy
You can contact Northwestern Mutual at:
Canceling a New York Life life insurance policy
You can contact New York life at:
Canceling a Transamerica life insurance policy
You can contact Transamerica at:
Canceling a Lincoln Financial life insurance policy
You can contact Lincoln Financial at:
Can I get a refund if I cancel my life insurance policy within the first year?
You won’t get a refund on your life insurance policy unless you cancel during the free look period, which usually lasts up to 30 days. Generally speaking, when you cancel a policy before the end of its term, you won’t get a refund because you still had active coverage during the time you were paying for the policy.
Canceling a permanent policy in the first year it’s active will result in surrender fees.
Situations when you would not get a refund
If you cancel your policy after the free look period, which is typically about 30 days, you would not get a refund.
Situations when you would get a refund
In some cases, if you have a return-of-premium rider, you may be able to get a portion of your premiums back if you cancel your policy. However, you’d have to add this feature when you initially purchased your policy. This feature is an added cost, so many people find they’d prefer to hold on to the extra money they’d be spending in premiums and save or invest it separately.
If you surrender a cash value life insurance policy, you wouldn’t get refunded on your premiums, but you’d be able to take back your cash value. Again, it depends on how long you’ve had your policy because some insurers don’t pay out your cash value if you’ve only held your policy for a few years.
Frequently asked questions
Can I cancel my life insurance policy at any time?
You can cancel your life insurance policy at any time, but canceling a permanent policy may result in surrender fees. There are no surrender fees with term life insurance policies.
What happens if you surrender a whole life insurance policy?
Surrendering a whole life insurance policy will end your coverage and you’ll be able to receive your cash surrender value, which is your cash value minus any fees. It’s best to check your provider’s surrender fee schedule before canceling your policy.
Can I exchange my life insurance policy for an annuity?
You can exchange a permanent life insurance policy for an annuity using a 1035 exchange. There are tax consequences for this kind of exchange so it’s important to discuss with a financial professional and insurance agent before proceeding.
What happens to my money if I cancel my policy?
If you cancel your life insurance policy, you’ll no longer have coverage. Since you paid for coverage previously, you won’t get your money back – similar to other types of insurance like health insurance and car insurance.
Can my beneficiaries take over my premium payments?
You can change the payor of the policy by contacting your insurance company and filling out paperwork. Both the current payor and policyholder and the new payor will have to consent.
