Co-Founder, Coastal Financial Partners Group, California
Assuming you are under no obligation such as an agreement or court order to continue a life insurance policy and are the policy owner, you may cancel at any time. Coverage will end and your premiums will stop. If it is a permanent policy, the cash value net of any loans or early surrender charges would be paid to you. If the cash value exceeds what you paid in premiums, that gain is subject to income tax.
As Jerry said, you can cancel a life insurance policy at any time, as long as there is not a court order or contractual agreement for you to keep it. When you cancel a life insurance policy, the coverage is lost and you would have to start over again with being medically underwritten (or buy a simplified or guaranteed issue nonmed plan) to get a new policy. The new rates will be at your older age and current health. Be sure that you are approved by this new policy before cancelling an old one, or be sure that you no longer need life insurance before cancelling a policy.
Life insurance policies that are owned by you and paid by you can be cancelled by you at anytime. The exception is mentioned above with a court order or contractual obligation.
A term life insurance policy is as easy as a phone call and it will be cancelled. Most insurance carriers will require your request in writing.
A cash value life insurance policy such as a whole life or universal life that has cash value may have some tax consequences to cancelling coverage. When you cancel a policy with cash value, the difference will be returned to you and you will be responsible for paying the taxes on the cash value growth at your current income level.
if this is the case, be sure and have a statement to look at prior to making the cancellation.
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A term life insurance policy is as easy as a phone call and it will be cancelled. Most insurance carriers will require your request in writing.
A cash value life insurance policy such as a whole life or universal life that has cash value may have some tax consequences to cancelling coverage. When you cancel a policy with cash value, the difference will be returned to you and you will be responsible for paying the taxes on the cash value growth at your current income level.
if this is the case, be sure and have a statement to look at prior to making the cancellation.