Can My Insurance Provider Cancel My Life Insurance Policy?

There are very few occasions in which an insurance provider would cancel a client’s life insurance policy, but it does happen. Insurance providers generally try their best to keep clients, as clients are how they make money, but sometimes a client is too risky to continue to insure.

One of the reasons a provider may cancel your life insurance policy is nonpayment. Just like with any other policy, you are expected to pay a certain amount in monthly premiums for your life insurance. If you miss too many of these payments or stop paying completely without notifying your insurance provider, your policy may be canceled.  

The other main reason a life insurance claim may be denied is fraud, or false claims. If a beneficiary tries to file a claim on a policy of an insured party who hasn’t passed away or if an insured party tries to pull out money from a policy that doesn’t allow cash back, the insurance provider has the right to cancel the policy due to fraudulence.  

Can Insurance Providers Cancel a Policy Without Warning? 

Most insurance providers are required to give at least a 30-day warning before canceling a policy. Keep in mind that you generally do not receive any money back for a cancelled policy. For example, if you have been paying premiums on a life insurance policy for the past two years, you will not receive any of that money back for the policy being cancelled. Be sure to take the appropriate measures to avoid your insurance policy being cancelled. 

Can You Stop an Insurance Provider from Cancelling You? 

In some instances, you may be able to haggle with your insurance provider to prevent cancellation. This is especially true if you’ve missed payments because of unexpected changes out of your control, such as being laid off and work shutting down due to a government mandate. They will likely ask that you pay a fee for your missing payments, however. An argument is more effective if your circumstances have changed and you now have a way to pay your premiums on time. 

If the issue was missing your payments, most insurance providers offer automatic drafts. Setting up automatic payments from your bank account can prevent you from missing a payment. 

A life insurance policy is an important asset to protect your family when you’re gone. Review your policy and speak with your insurance agent if you have any questions.