With Term insurance there is no penalty for cancelling at any time, except for losing the coverage.
With Whole or Universal Life, there is a surrender charge in the first years of the policy that will be deducted from any cash value you might have gotten back. If there is no cash value, you simply lose the policy. Keep in mind that, unless you paid extra at the start, the first years of the policy do not generally accumulate cash value as quickly as later. Talk over cancellation of your Whole or Universal Life with an agent who can explain the consequences and options for keeping it in some form. You may find that cancelling is not want to do, after all. Or you may have affirmation that you are doing the right thing.
Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
You can, but should you? Life insurance is personal property and an asset. The policy owner can cash in the policy. The first consideration is surrender charges. If you cash in your policy, i.e. terminate it, you may pay surrender charges and lose coverage. You also may haven ordinary income tax bill for any gain in the contract. Before you move forward with cashing in your policy, check with the company for all the consequences of surrendering your contract.
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With Term insurance there is no penalty for cancelling at any time, except for losing the coverage.
With Whole or Universal Life, there is a surrender charge in the first years of the policy that will be deducted from any cash value you might have gotten back. If there is no cash value, you simply lose the policy. Keep in mind that, unless you paid extra at the start, the first years of the policy do not generally accumulate cash value as quickly as later. Talk over cancellation of your Whole or Universal Life with an agent who can explain the consequences and options for keeping it in some form. You may find that cancelling is not want to do, after all. Or you may have affirmation that you are doing the right thing.