How to Cancel Your Life Insurance Policy

Canceling term life insurance is straightforward. You simply inform your insurer and stop your payments. You can cancel at any point during your contract.

If you cancel within the free look period, you'll get a full refund. This period lasts anywhere from a week to a month or more, depending on your insurer and state regulations. Ask about the free look period length before buying any policy.

What happens next depends on whether you're canceling term or whole life insurance and when you decide to cancel. Understanding these rules helps you know what to expect, including potential refunds or cancellation fees.

Canceling a term life insurance policy is straightforward. You have three options:

1. Stop paying premiums

You can let your policy lapse by not paying your insurer. Your policy will end after the grace period, which typically lasts 30 to 31 days after your payment due date.

2. Send a letter to your insurer

A written notice is a quick way to let your insurer know you want to cancel. Here's a sample cancellation letter:

Your insurer may also provide an online form for how to cancel term life insurance. Additionally, they can guide you through the cancellation process, whether you prefer to complete it online or over the phone.

3. Call your insurer

Some insurers have a dedicated cancellation hotline where they can process your request immediately. Check their website for the number.

Term life insurance cancellation typically doesn't involve penalties or fees.

Canceling permanent life insurance, including whole and universal life, is more complex because these policies build cash value. Unlike term life policies, permanent policies include a nonforfeiture clause. This clause means you can receive full or partial benefits or a partial refund after nonpayment. What you receive depends on your insurer.

1. Surrender or cash out your policy

Whole life policies accumulate cash value over time. If you withdraw during the surrender period (typically the first few years), you'll face steep surrender fees or receive no cash value. After the surrender period, you'll likely get some funds but may still pay a surrender fee. Your policy ends once you withdraw the cash value.

2. Sell your insurance

Your policy is an asset you can sell to a third party. If cancellation seems too complex, selling offers a straightforward solution. Research and contact a reputable broker. The buyer receives the death benefit when you pass away. Alternatively, a 1035 exchange lets you trade your policy for another financial product without tax implications.

3. Let it expire

Some insurers automatically terminate and cash out your policy if you stop paying. Others use your cash value to cover premiums until it's depleted. Both options may involve surrender fees and taxes.

4. Choose a reduced paid-up option

Some insurers let you stop payments while keeping the policy active with a lower death benefit. This depends on how much you've already paid. Contact your insurer to see if they offer this option.

The exact process and what you receive varies by insurer and their specific policies.

The outcome of surrendering your policy depends on timing. The surrender period is how long you must wait to withdraw your cash value without fees or penalties. This period varies by insurer.

• During the surrender period: Your insurer may refuse to give you the cash value or impose severe penalties if you cancel before this period ends.
• After the surrender period: You can withdraw your cash value and cancel without penalties. You may also be eligible for a refund based on your policy terms.

Understanding surrender period timing helps you decide whether to cancel or keep your coverage. Canceling early often leads to substantial losses, while waiting until after the surrender period gives you more options. Term life insurance offers more flexibility since you can cancel anytime without financial penalties.

Consider your specific situation and think long-term before canceling. Depending on your policy type and timing, you might receive less than you've paid in premiums.

Canceling a life insurance policy rarely guarantees you'll get your money back. But there are two exceptions:

• During the free look period: All policies include a free look period at the beginning when you can cancel and get a full refund. This period length varies by insurer and state.
• Mid-billing cycle cancellation: If you cancel after the free look period but mid-billing cycle, you might get a prorated refund for the unused portion of that cycle only.

Cancellation rules vary by insurer. Before buying, ask your agent about their specific cancellation policy and refund possibilities.

The cancellation process depends on your policy type and timing.

Canceling term life insurance is straightforward: stop paying premiums and notify your insurer by letter, phone or online form. Canceling permanent policies like whole life insurance is more complex due to the cash value component. You may face surrender fees or other financial consequences.

Consider your reasons for canceling and consult a financial advisor if needed to make an informed decision.

Learn more about canceling life insurance by reviewing our answers to frequently asked questions.

Why Trust MoneyGeek? We analyzed 1,488 life insurance quotes alongside customer satisfaction ratings, financial stability reports, product offerings and more to determine the best life insurance companies for a variety of needs.

Recency
Coverage costs and company information for life insurance providers were updated in 2025.

Methodology

MoneyGeek created a scoring system to compare life insurance companies across five categories and ranked them based on their scores. We chose to review these companies based on their broad national coverage and ability to provide an online quote. 

MoneyGeek’s Scoring System

In our unique scoring system, companies can earn up to five points in each category. We then use these category scores to calculate an overall MoneyGeek score out of 100. We applied the following weightings to score insurers:

• Affordability: 30%
• Financial Stability: 25%
• Buying Process: 20%
• Customer Satisfaction: 15%
• Product Diversity: 10%

Each company’s score incorporates the following:

• Cost data obtained through online quotes
• Financial strength ratings from AM Best and number of years in business
• Customer satisfaction data from the National Association of Insurance Commissioners (NAIC) customer complaint index (we reviewed annual complaint data from 2020 to 2022, the most recent year available)
• Availability of tools to aid in the buying process, such as online product materials and multiple payment options
• Diversity of life insurance products offered

Sample Customer Profile

MoneyGeek used a standard profile to obtain life insurance quotes:

• 40-year-old male
• Nonsmoker
• 5 feet 11 inches tall and 175 pounds
• Excellent health rating

Premiums are based on the standard profile unless otherwise noted. 

We modified the profile by age, gender, height, weight, tobacco use, health rating and geographic location to collect a variety of quotes and determine the best life insurance company for several types of customers. We also collected quotes for term life insurance with varying term lengths and coverage amounts.

We identified trends in the data set and used those patterns to calculate projections and extend the data beyond what was initially collected.