There are many recent unfortunate incidents that have led to complicating people’s lives. Firstly, the occurrence of the 2020 Covid-19 pandemic. Secondly, the ever-rising inflation worldwide, due to the Russia-Ukraine war.
Consequently, people have been laid off from large corporations and multinationals, all across the globe and in the US. Sometimes a situation for the majority population arises where they’ve to choose between putting gas in their car or paying monthly life insurance premiums.
Due to these pressing concerns, retaining their life insurance and paying monthly premiums has become unaffordable for many policyholders.
Obviously, daily life obligations are more important. When it becomes difficult to pay for the daily household expenditures, it is time to make a sensible decision.
For such grave situations, one can cancel their insurance, instantly. It can be your auto insurance, health insurance, medical insurance, home insurance, or life insurance. You keep the ones with the lowest premiums and get rid of the costly ones.
Here is a comprehensive and easy guide to the cancellation of your term life or permanent life policies.
How do I cancel my Term Life Policy?
The best part is cancelation of a term life policy is a piece of cake. You’ve got 4 options:
- Stop paying the monthly premiums, your term life policy will lapse! Let it, since it is unbearable for you now.
- Go to the official website of your insurer firm, fill out their cancellation form, and submit it.
- Call your insurer firm, talk to your insurance agent, and instruct him to cancel your term life policy right away.
- Write a formal cancellation letter for your term life policy to your insurer firm.
How do I get rid of my permanent life insurance policy?
If you want to cancel your whole life or universal policy, it is not complicated either. Call the insurer carrier, and inform them that you can no longer afford to pay the monthly premiums. Direct them to cancel the life insurance policy politely.
With the universal or whole-life policies, you will only get your accrued Cash Value. If you bought the policy say 2 years ago, obviously the cash value would be way less than substantial. Do remember that for permanent life insurance policies, firms charge a “cancellation fee” which is deducted from your accumulated Cash Value account too.
There are 3 options that a carrier will offer you, choose wisely!
1. Forfeit future Death Benefit Payout
If anyone discontinues his monthly premium payments, automatically his whole life or universal policy lapses right away! This results in forfeiting the death benefit payout and any future coverage for his dependents.
2. Convert permanent policy to term life
The insurer will offer you to use your cash value money to buy a term life policy with him, instead. This will lower your monthly premiums significantly. But beware your beneficiaries are covered only within that term period.
3. Opt for a Reduced-Paid up Policy instead
Switch from the least expensive permanent policy to a lower Death Benefit payout policy. Your insurer will offer you alternative options with lesser payout and premiums. Convert your last policy to this one. This is the best-suited option, compared to the other two.
This lets you keep the permanent life insurance policy and it is purchased with the money in your Cash Value from the previous policy. The monthly premiums would be way cheaper onwards. After your death, your loved ones will get a full death benefit payout.
Can I sell my Whole Life or Universal Life Insurance Policy instead?
Is it better to sell your permanent policies instead of letting them lapse, forfeit payout, or convert to less stable or beneficial ones?
The answer is quite simple,
- If you’re more than 65 years old,
- Have been diagnosed with a fatal illness,
- And on a permanent life policy with a face value equivalent of more than $100,000.
Sure! Sell it.
Research online for brokers to interview many! Ask them as many questions as possible. Ask if they’re licensed in your state. Ask how much commission they’ll charge you for selling your policy. Ask them how long has it been since they’ve been in the market. Ask what is the structure for charging a commission.
Negotiate and get the best offer from them. They’ll bring many buyers from the market to you in a couple of months. Take your time and choose the highest buyer.
Go ahead and Sell your whole life or universal policy. It may not give you as high an amount as your final Death Benefit Payout, but it will be better than what you can get from any other option. FYI selling your life insurance policy is technically called a “Life Settlement”.
Contact Numbers of the Popular Insurers
Here at Insure Guardian, we can facilitate you in the process of cancellation of your life insurance policy. Call the one you’ve bought your insurance policy from and instruct them to cancel it due to your lack of affordability!
Canceling a State Farm life insurance policy
You can contact State Farm at:
- One State Farm Plaza Bloomington, IL 61710
Canceling a Northwestern Mutual life insurance policy
You can contact Northwestern Mutual at:
- 720 East Wisconsin Ave. Milwaukee, WI 53202
Canceling a Transamerica life insurance policy
You can contact Transamerica at:
- PO Box 189 Cedar Rapids, IA 52406
Canceling a Lincoln Financial life insurance policy
You can contact Lincoln Financial at:
- 10 N Greene St. Greensboro, NC 27401
Can I cancel my life insurance policy at any given point in time?
Yes, you can cancel your life insurance policy whenever you have to.
What are the reasons why people cancel their life insurance policy?
Usually, the reasons include disability to continue premium payments, financial independence of beneficiaries, owning sufficient real estate assets, having paid off mortgage debts, or returning all loans.
How can I cancel my universal life insurance policy?
The steps are quite simple, call your insurance company and ask them to cancel your life insurance policy. If you try to let it lapse by not paying a premium, it will still have a 30-60 days grace period. So make sure that you call your company and tell them about your decision to cancel the life insurance policy.
What are the fees for canceling my life insurance policy?
For a term life insurance policy, you can cancel it for free. For a universal life policy or a whole life insurance policy, a certain cancellation fee is deducted from your accrued cash value.
Is it better to sell my insurance instead?
That depends, for instance only life insurance policies that are highly likely to get sold off are the ones with policyholders older than 65 years, the policy value must be $100,000 or more, and the policyholder should be formally diagnosed with a fatal illness.
When you sell your life insurance, you can get the most monetary value in exchange for transferring the ownership of your life insurance policy to the buyer.
If you die after selling it off to the new buyer, your beneficiaries will receive nothing after your death, instead, the new policy owner/ buyer will receive its Death Benefit payout.