There are times when insurance buyers get bewildered while purchasing a life insurance policy, and they end up buying the incorrect policy. There’s no such thing as an incorrect policy. But buying a life insurance policy that doesn’t align with your financial goals may turn out to be a poor financial instrument.
In case you have a life insurance policy that does not match your requirements anymore, there is no obligation to continue that policy for the entire tenure. Almost every life insurance policy arrives with an exit alternative if the policyholder does not wish to continue the policy. Therefore, before you cancel insurance policy, you must consider the alternative options. However, rest assured that if these alternatives don’t work, you can simply cancel your insurance policy. If you are wondering how to cancel insurance policy, don’t worry, we have covered that later in this blog.
Before you hit the brakes, let's explore some options that can keep you covered without sacrificing the policy entirely.
Dial Down the Coverage: Life changes mean life insurance needs to change, too. If your financial obligations have lessened, you might not need the same level of coverage you did initially. Talk to your insurer about reducing your death benefit amount. This lowers your premium payments while maintaining a safety net for your loved ones.
Cash Value to the Rescue (For Whole Life Policies): Whole life insurance policies build cash value over time. This can be a lifesaver if you're facing temporary financial difficulties. You can utilise this cash value to pay your premiums, ensuring your policy stays active even during rough patches.
Paid-Up Power (For Term or Whole Life): Here's a strategy for those with some accumulated cash value. The paid-up option essentially converts your current cash value into a reduced death benefit policy. The beauty? It's fully paid-up and permanent! You'll have guaranteed lifetime coverage without ever needing to pay another premium.
Extend Your Term (For Term Life): Term life insurance is fantastic for a set period, but what if you need a little more time? The extended-term option lets you leverage your policy's cash value to extend coverage for a specific period, often 10 or 20 years, without further premiums.
Borrowing from Your Policy (For Whole Life): Whole life policies allow you to take a loan against your cash value. This can be a helpful solution in a pinch. However, remember – it's a loan! Interest accrues, reducing your cash value and death benefit. Use this option strategically, and be sure you can repay the loan.
Talk to Your Insurance Team: Don't be shy! Your insurance provider is there to guide you. They can explain all these options in detail and help you determine the best course of action to keep your valuable coverage in place. So, reach out, have a conversation, and find a solution that works for you.
You can borrow money from the cash value of your whole life insurance policy. However, this will reduce the cash surrender value and death benefit of the policy.
Life insurance policies offer the much-required cover of protection to you and your loved ones in case of any unfortunate event. While everyone needs to have a life insurance policy, there can be an array of reasons why you prefer to withdraw your policy. Some of the reasons for a life insurance plan cancellation are mentioned below:
If you have foreclosed all your existing loans and hold enough buffers to safeguard your family on your own, you can cancel a life insurance policy.
If you do not hold enough funds to pay the premium amount, you can cancel your life insurance plan.
You can also cancel a policy when you think you have purchased the wrong policy and deplore purchasing it.
You have discovered a life insurance plan that extends more dependable coverage at a more economical price.
You can cancel or withdraw the life insurance policy depending on the kind of plan you have taken. While you can easily terminate a term insurance anytime you wish, it is more challenging to cancel a whole life insurance policy.
Mentioned hereunder are a few steps on how you can cancel your term life insurance policies and even whole life insurance policy.
The most suitable way for a life insurance plan cancellation is to talk to your policy provider and inform them why you do not wish to continue with your policy. Informing the policy provider about the cancellation can make the whole process easier.
Also, if the high amount of premium is the main concern due to which you wish to cancel the policy then, the policy provider can also work out resolving this problem so that there is no need for canceling the policy.
If you stop paying the premium amount of your life insurance policy even after the grace period provided by the policy provider, then your life insurance policy will automatically stand cancelled. However, this non-payment of premium is usually not the right practice, and you must always inform the policy provider about the cancellation decision.
Cancelling a whole life insurance policy can be a challenging task. If you hold whole life insurance, then, in that case, the best way to cancel that policy is to cash out that policy. The most beneficial part of this whole life insurance is that it owns a cash surrender value along with a surrender period.
If the policyholder cancels the policy within this surrender period, you can receive the entire sum after deduction of the penalty amount.
Another way to cancel your life insurance policy is to withdraw it during the free look period. A free look period is a term of 10 to 30 days where the policyholder can cancel the life insurance policy and will get a complete refund of the premium paid without much paperwork.
Here’s all you want to know about a free look period.
While the life insurance plan cancellation process seems easier, people usually face problems while actually doing so. Hence, before cancelling a life insurance policy, you must keep in mind that even if you are paying the insurance premium for years, you will not receive any amount as a refund.
Apart from this, you will not even get the policy coverage once you cancel your life insurance policy. If you reapply for a new life insurance policy, you will have to go through the complete application procedure again. In addition to this, the policy provisions of the term life insurance policies further hold the right to forfeit the entire premium amount.
The insurance company from which you have taken an insurance policy cannot cancel your policy in any case other than the two situations mentioned below.
There are two main ways to terminate your life insurance policy with Canara HSBC Life Insurance: cancellation during the free-look period and policy surrender. Here's a breakdown of both:
Cancellation During Free-Look Period:
This is your window to cancel the policy if you're not satisfied with it, usually within 15 days of purchase (30 days for electronic policies or those bought remotely). You'll receive a full refund of the premiums paid.
Here's what to do:
Contact Canara HSBC Life Insurance: Reach out to their customer service department by phone (toll-free at 1800-258-5899) or email (customerservice@canarahsbclife.in).
Inform Them of Cancellation: Clearly state your intent to cancel the policy and the reason behind it.
Submit a Written Request: Follow up with a written cancellation request, mentioning your policy details.
Policy Surrender
If you're outside the free-look period, you can surrender your policy, but you won't get the full amount back. Canara HSBC will deduct surrender charges from the premiums you've paid.
Here's the process for surrender:
Important Note: Surrendering a policy can mean losing out on potential benefits that accumulate over time. Consider exploring alternatives like a policy loan before surrendering.
Life insurance policies are a positive move towards long-term economic devising and protecting your family. Hence, you must ensure that you never decide to purchase a life insurance policy in haste. iSelect Smart360 Term Plan by Canara HSBC Life Insurance is one of the best life insurance plans in the country. It provides comprehensive life coverage till the age of 99 years and all that at the most affordable monthly, quarterly or annual premiums.
Whole life insurance: Combination of life insurance coverage with a savings component. The cash value grows over time and can be accessed through loans or withdrawals.
Cash surrender value: The amount of money that a policyholder can receive if they cancel their life insurance.
Surrender period: A period of time, typically a few years, during which the cash surrender value of a whole life insurance policy is less than the total premiums paid.
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It depends on your insurance company. While some insurers allow you to initiate the cancellation process online, others might require you to contact them directly by phone or email. It's always best to check your insurer's website or contact customer service to find out their specific cancellation procedures.
There are a few reasons why you might consider cancelling your insurance:
You no longer need the coverage (e.g., you sold your car and don't need car insurance).
You found a more affordable policy with another insurer.
You can't afford the premiums anymore.
It depends on when you cancel your policy:
During the free-look period: Most life insurance policies come with a free-look period (typically 10-30 days) where you can cancel the policy and receive a full refund of your premiums.
After the free-look period: If you cancel your life insurance outside the free-look period, you will likely receive the cash surrender value of the policy, which is usually less than the total premiums you've paid. The earlier you cancel, the lower the cash surrender value will be.
The time it takes to receive a refund on your life insurance policy will vary depending on the insurer. It typically takes a few weeks to process the cancellation and issue the refund.
Yes, you can cancel your current life insurance policy and switch to a different insurer. However, keep in mind that you will likely lose some money if you cancel outside the free-look period. You will also need to go through the application process again for a new policy, which could involve a medical exam.
While there are many reasons why a policyholder wishes to cancel a life insurance policy, it is not at all advisable that you cancel your insurance policy. The biggest reason why you must not cancel your policy is that if you do so, the premiums that you paid for a long time get forfeited, and all your premiums will go to waste.
