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What happens if you cancel life insurance?

28 November 2022
5 minute read
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A common reason why people cancel life insurance is that their financial circumstances have changed and they no longer believe they need it. They would prefer to use the money for other instant gratification purposes. When we buy a product or service, we usually pay to use it, but in the case of life insurance, the opposite is true; we don't want to use the product! Insurance, in general, is often referred to as a grudge purchase and this needs to change. But, before a policy is cancelled, policyholders should consider the devastating implications for loved ones. We answer your questions about policy cancellations including how to make cover more affordable and how to reinstate policies.  

How is a life insurance policy cancelled?

In order to cancel your life insurance policy, you will need to call your life  insurance company. Because life policy cancellations differ from provider to provider, they will be able to provide you with their specific cancellation process. Remember to ask your provider when your cover will end. It is also  important to note that  you should not be charged any fees or charges for a life cover cancellation. 

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How can I make my life cover more affordable?

If cost is the primary reason for life cover cancellation, there are ways to reduce your premiums without losing your insurance coverage. For example you can reduce your sum assured or ask your insurer if there are other ways you can save on your premiums. Perhaps you have stopped smoking or your occupation is no longer considered high risk - these can positively affect your life insurance premium. Make sure you speak to a 1Life consultant to tailor make your cover to suit your pocket. 

Do you get your money back if you cancel your life insurance? 

The answer is no. Life insurance is a risk product, which provides your family financial protection, through the payment of the sum assured, upon your death, as long as you pay your monthly premiums. 

Can you reinstate a cancelled life insurance policy?

Speak to your life insurance provider about reinstating a cancelled life policy, but there are time limits within which you can do so. If you are able, you might have to answer health questions (undergo underwriting) again and your premium might increase and if not, you will need to get a new life insurance policy.

Think twice about cancelling your policy. Rather find a way to make room for life insurance premiums in your budget. Perhaps you can reduce entertainment expenses or holiday savings. Giving your family protection against the loss of your income and the peace of mind knowing that their lives can continue financially uninterrupted,  is one of the best gifts that you can give them!

Talk to us 

If you miss a policy payment, 1Life will advise you via SMS, email or letter that a debit order has been returned by your bank as soon as we are notified (usually within a few days of a debit order bouncing). 

There is a grace period of 31 days if you miss a payment, so you have 31 days from when the premium was due to make up the missed payment.  If you don’t catch up and pay your premium, you and your family won’t have cover and claims won’t be paid.

1Life Insurance understands that no South African can afford to be without the financial protection of life insurance. We  work with our policyholders to make life insurance not only affordable but also tailored for their life stage. Talk to one of our skilled consultants today. 

The views and opinions expressed in this article are those of the authors and do not necessarily represent or reflect the views of 1Life Insurance or its employees.

We answer your questions about our products and services!

What is the process for cancelling a life insurance policy?

In order to cancel your active life insurance policy you will be required to contact your life insurance provider who will instruct you on what they require in order to cancel the policy. In most cases it will be a formal communication instructing the insurer of your intent to cancel with relevant information such as your policy number.

Are there any fees or charges associated with cancelling life insurance?

There are no fees or charges for canceling your life insurance. Your costs are your monthly premium and that might be pro rated if you have enjoyed cover for a period. Always read your policy schedule and documents when taking out your policy to ensure this is the case with all insurers.

Can I make my life insurance more affordable without cancelling it?

You can reduce the sum assured you have on your policy to reduce your life cover premium. It is always best to speak to your financial advisor or a skilled 1Life consultant to best approach how to tailor your cover to your price point. It is never recommended to cancel outright but rather to drop cover to a minimum until you are in a place that you can afford to increase cover.

Is it possible to get a refund or money back if I cancel my life insurance?

No refunds or money back apply to active life or funeral cover policies as these are considered risk policies. Risk policies are policies where you pay premium to an insurance company to cover you for the risk that could happen i.e. death where the insurance company would then pay out a lump sum as per your policy schedule.

How can I reinstate a cancelled life insurance policy?

There are rules and time constraints around when you can reinstate your life insurance policy, such as a maximum of 3 months from lapse. You might also be required to redo your underwriting in order to get the cover back in place. You will need to make contact with your financial advisor or a skilled consultant who will advise on any limitations and possibilities of reinstating your specific policy.

If I'm looking to reinstate a cancelled life insurance policy, what health-related questions or underwriting processes might be involved?

Each policy will be dealt with on an individual basis, you will be required to speak to a skilled consultant or financial advisor to understand what and if underwriting will need to be completed again upon reinstatement.

Why should I think twice before cancelling my life insurance policy?

The bottom line is do you know when you are going to pass away exactly? The answer is no. Your life insurance policy is there for the financial security of your family and would you want to be caught with no life insurance policy and your family losing their home or financial security? The answer should again be no, this is why it is important to keep your life cover policy always.

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