term insurance - Can it be cancelled?

Question

I have a 20 year term insurance.
I think I am paying too much now. Can I cancel it, and go for another one, where the rates are cheaper? What are the drawbacks of doing this?

Answer 1

It depends on when you bought this term policy. If it was bought a year or couple years ago, then canceling this policy to buy a cheaper term policy may be a right move. If it was bought years ago, then your rates will be a little higher since you are older.

Though, you have to compare the two policies. Is the new one you looking at a 20 year term also? Is it the same coverage? If yes, then you need to compare the features of each policy. What benefits or features are you in current life policy and in the new one? I'm not talking about riders such as Waiver of Premium. For example, one policy may allow you to use a certain percentage of the face amount in case you become terminally ill and the other doesn't. One policy may allow you to put your spouse in the policy so that you lower your insurance cost and get discount rates for adding spouse.

What happens if the term policy is about to expire? Does one renew itself or does it convert to a whole life policy? Does one allow you to exchange the term policy for a different term policy?

Answer 2

Yes, you can cancel a life insurance policy at any time. Just notify the life insurance company via the phone and/or mail them a request to cancel.

The drawbacks of canceling your life insurance policy may include:

1. You no longer have life insurance protection (until you buy a new life insurance policy).

2. You may be unable to get more life insurance if your health has changed.

3. You may not be able to get as much, or more life insurance coverage as you currently have depending on your health and age.

4. The rates may be higher depending on the life insurance company, your age, the amount of coverage you apply for and what the current rates are.

First, before you cancel your life insurance policy, try the following:

1. Go online and request free quotes from a life insurance quote provider. They will give you multiple quotes and you can find out if the rates will be substantially lower than what you are paying. You may find that the rates are lower, or that you can get alot more coverage for the same money you are now paying.

2. Use a life insurance calculator to determine the amount of coverage you need.

3. Review the A.M. Best financial rating of the life insurance company. Your quotes will show the rating for each company (look for one with a rating of "A" Excellent or better).

4. If you don't want your rates to increase, consider Level term life isnurance - rates and coverage remain level for the entire term of the policy.

Make sure you get approved and purchase your new life insurance policy before you cancel your current policy. That way you are not left without protection for any period of time.

I hope that helps! Best of luck to you.

Answer 3

You can absolutely cancel at any time. When you purchase a life policy the company rates you on (1) your age and (2) your current health. If you cancel and decide to purchase elsewhere that new company is going to rate you at your current age and health status. Not a huge risk if you've only had the policy for a year or two. Could be a risk if you've had it for say 5-10 years.

Answer 4

You can cancel, but First get quotes from other companies , and then compare. you might be able to cancel and get a good rate from the same company Try Select Quote. You could Google term insurance and do all your checking of rates on line. Rates have fallen, do a lot of checking before you take another offer, you want a solid company to get a policy from.

Answer 5

Being an insurance salesman, a twenty year term is a decent enough investment if you are looking for alot of insurance for little money. It does not gain any cash value, so after the term is over, it is over. You can always convert it to whole life, it will be more monthly, but it will perform for you alot better than term. It also depends how old the poilcy you have now is. If it was taken out 10 years ago, now, you are 10 years older, so of course it will be more expensive. I would contact the company and have an agent come out to you and explain it all.

Answer 6

Why do you believe you are paying too much? Is it level tewrm or is it Annually Renewable term? If the second one I would recommend switching to level term. And remember, cheaper does not mean better. It may be more cost effective to keep this one. But do not cancel it. Keep it in force. If you cancel and die, you die. But if you keep it and look around, if you die your beneficiary gets paid.

Answer 7

Absolutely you can.

Just don't cancel until the new policy is in place!