If you are thinking of cancelling your life insurance policy there are some things you may want to consider before you finalize anything. There are often some unintended consequences that occur as a result of canceling your life insurance policy that many people are not aware of. Here we will go over some of the things you can expect to happen if you cancel your life insurance policy. Some of the most common things to consider when you are think to cancel your life insurance policy are losing out on the return of your premiums, and not having coverage.
You will Not Have Coverage
If your life insurance policy originally had covered you, when you cancel your plan you will no longer have that same coverage protecting you and your family. That can be scary. If you are cancelling your life insurance because you are planning on starting coverage with another provider, it is important to understand that as soon as you cancel your plan you will no longer be covered. That is why I would recommend starting a life insurance policy with the new company first before you cancel your old policy. Doing this will ensure that you are covered in case anything were to happen in the period of time you were not covered.
You Will Not Get Your Premiums Back
Often times when the time period for term life insurance is up you will receive your premiums back. This is one of the major benefits of term life insurance because you were protected the whole time and you get back a nice lump sum of cash at the end of the term. With that being said, you do not receive back any of the premiums you have paid for term insurance if you cancel your policy. If you are thinking about or trying to cancel your life insurance policy, I would suggest using an online calculator to determine if it is worth cancelling your plan. The only time you get your premiums back is when you let your policy end at the term date. If you have term life insurance you may want to first see if it is worth doing. If your term is coming to an end within the next 5 years you may want to stick it out and continue with the insurance policy. That way you will be able to receive your premiums back at the end of the term.
You Will Have to Reapply for Coverage
If you decide to cancel your life insurance policy, you will no longer be covered. If you do want coverage again at some point in the future, you will have to reapply for new coverage. This can be a painstaking process and it can be sad because now you may have to pay higher life insurance premiums than you were paying before. If the status of your health has changed or if you are much older than you may have to pay a much higher rate when you reapply for coverage.
If you are thinking about canceling your life insurance coverage you should first consider the point made in this article. When cancelling your insurance you need to understand that you will not have coverage after you cancel your plan and that if anything happens to you during the period you are not covered, no life insurance payout will be made. It is important to already have a new insurance policy effective before you decide to cancel your existing plan. You want to ensure that you are always covered if you need it. Also, remember by cancelling your plan, you may be forfeiting that premiums that you would normally receive back at the end of your life insurance term.
Remember that if you cancel your coverage that you will have to re apply if you want coverage again in the future. Before applying for coverage in the future can be time consuming and also cost you more money in the long run. If you reapply for coverage you may have to pay higher premiums than you would if you had stayed with your original plan. This is because of the ways life insurance providers calculate your premiums. Often times your age and the status of your health will determine the amount of insurance premium you will be paying each month. If you are going to cancel your life insurance policy, please remember these three things to ensure you understand what happens when you cancel it. Knowing what happens when you cancel your life insurance policy will help you stay informed and free of any surprises down the road.
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