Can You Cancel Life Insurance in Canada?
Life insurance is a tool that provides financial security for individuals and their families in case of unforeseen circumstances. However, as circumstances change over time, maintaining life insurance might not always be the best option. This could be due to high premiums, changing financial scenarios, or a shift in beneficiaries.
Here are some reasons why you might consider cancelling your life insurance policy:
- Your budget has become more limited and cannot cover ongoing premiums.
- There are no longer any beneficiaries or future financial obligations.
- You’ve found a superior insurance policy offering more benefits.
- You’re considering switching from a life insurance policy to a life settlement.
But the question is: Can you cancel life insurance in Canada? If so, how and why should you do it?
Can You Cancel a Life Insurance Policy in Canada?
Yes, you can cancel a life insurance policy in Canada. The process varies depending on each individual’s circumstances. For instance, term life insurance, which offers coverage for a set number of years, is easier and less costly to cancel than a whole life insurance policy, which lasts for your entire life and can come with additional cancellation fees.
Should You Cancel Your Life Insurance Policy?
The decision to cancel a life insurance policy is not an easy one and may not be the right choice for everyone. You may question, “Should I cancel my life insurance?” if you can no longer afford the monthly premiums, are no longer satisfied with the plan, or simply no longer see the need for it.
For some Canadians, selling a life insurance policy is an alternative worth considering. Through a life settlement offered by Canadian Life Settlements, individuals can receive cash that may be significantly more than the cash surrender value of their policy.
Steps for Canceling Life Insurance in Canada
Depending on the insurance provider and the type of life insurance, the cancellation process can differ. Here’s how to cancel life insurance during the Free Look Period, Term Life Insurance, and Whole Life Insurance:
- Cancel During the Free Look Period:
In Canada, a free look period is typically 10 days from the time you sign the policy, although this period may vary depending on the insurer. Canceling your policy within this period allows you to avoid penalties or additional costs, and you can receive a full refund for any premiums you’ve already paid.
- Cancel Term Life Insurance:
Canceling a term life policy is a relatively straightforward process. However, you won’t receive any monetary return unless you cash in your policy. The steps to cancel a term life policy involve contacting your insurance company, stopping monthly payments, and confirming your cancellation request either verbally or in writing.
- Cancel Whole Life Insurance:
The process for canceling whole life insurance is more complex due to the policy’s potential investment value. You could consider exchanging your whole life policy for a life settlement through Canadian Life Settlements, or you could cash out and surrender your policy, stop making payments and let your policy lapse, or consider a reduced paid-up option.
Can Your Life Insurance Company Cancel Your Policy?
An insurance company can cancel your policy, but only under specific circumstances. These include not making timely payments beyond the grace period or providing fraudulent information during the first two years of your policy, known as the contestability period.
Are There Alternatives to Canceling a Life Insurance Policy?
If cancelation doesn’t feel like the right step for you, there may be several alternatives available:
- Lower your coverage or switch to a different plan.
- Consider a tax-free exchange, known in Canada as a Section 148 transfer, allowing you to carry your existing insurance funds into a new policy.
- Sell your life insurance policy in exchange for some cash through a life settlement offered by Canadian Life Settlements.
Navigating the options around your life insurance policy doesn’t have to be a daunting task. If you’re considering a life settlements as an option, Canadian Life Settlements is here to assist.
Are you considering a life settlement for your life insurance policy? Wondering if you’re eligible to sell your life insurance policy? Learn more about selling your policy and find out if you qualify for a life settlement by contacting the experts at Canadian Life Settlements today.