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 canceling 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.
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.