Skip to ContentSkip to Footer

What Happens If I Cancel My Life Insurance Early?


A life insurance policy is a wise investment, but also a financial commitment. Most are effective for 30 years or more. For your policy to remain in effect, you must continue paying your premiums, month after month. If the premium payments are putting a strain on your budget, you may be considering the option of canceling early, although people also cancel for other reasons. Our agency can review your life insurance policy and advise you of what to expect if you cancel.

What Are the Reasons To Cancel Life Insurance?

People with life insurance may consider cancelling their policies for a variety of reasons, including:

  • Life insurance is no longer needed (Children are grown and no longer dependent and the mortgage is paid off, for example).
  • Premiums are no longer affordable (Financial circumstances have changed).
  • Desire to access the cash value portion of a whole life policy (There may be a use for the money at the present time).
  • Improved health or industry-wide decreases in cost have made better rates available.

Will I Get a Refund with Early Cancellation of Life Insurance?

If you have been paying your life insurance premiums but now want to cancel your policy early, you may be wondering whether any portion of your premiums will be refunded. The answer depends on the type of life insurance you have.

  • If you have a term-life policy and cancel early, you should not expect a refund.
  • A whole life insurance policy with cash value may provide you with some cash out when you cancel.
  • Return of premium (ROP) life insurance refunds your premiums if your policy expires before you die, but not if you cancel early.

If I Cancel Early, What Are The Repercussions?

If you have a life insurance policy that you are considering canceling, it is important to know what will happen if you do.

  • You will no longer have life insurance. This is the most obvious repercussion of cancellation. Your family will not receive any death benefits when you die. Once your policy is canceled, so is your coverage.
  • Your premium payments will be forfeited. Unless you have a whole life policy, if you cancel your life insurance early, you will not get anything back for the premiums you have already paid.
  • You forfeit your current rates. If you cancel your policy early, and then decide you want life insurance in the future, you will have to reapply for new coverage. You may be required to have a medical exam, and your rates may be higher.
  • If you cancel a whole life insurance policy within the first 10 to 20 years (depending on the specific policy) the cash value may be subject to high fees from the insurance company.
  • Although life insurance death benefits are not taxable income, cash value from a canceled policy is taxable.

If you have been paying your premiums for years, canceling a life insurance policy is a big step to take. Our friendly agency can provide you with information and advise you on the best course of action.

Get A Quote

* indicates required fields

Text Message Opt-In
This field is for validation purposes and should be left unchanged.

Customer Reviews

He always gets me a great deal and helpful with other products...

Trex W

He is knowledgeable, thorough and is great at putting his client at ease.

David C

I am very satisfied with how the whole process was managed.

Rita C

Switching my car insurance over to Stairway Insurance Agency was a no-brainer!

Justin D

Matt Wadz always takes the time to answer any questions.

Marshall P