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Do I get money back if I cancel my term life insurance?

While this may seem like a simple question, the truth is that it’s often a question that three different groups of people ask. 

The first group…

Of individuals who like to ask this question will be those who are currently deciding whether or not they want to accept a life insurance policy that they’ve been approved for.

The second group of folks…

Who like to ask this question will be those who are wondering what happens to their “current” monthly or annual premium should they decide that they no longer want to continue paying for their life insurance policy.

And the last group…

Of individuals who commonly ask this question will be those wondering what happens to all the money they have paid into a life insurance policy if and/or when they decide to cancel their policy.

“So, the real question becomes, what “group” do you fall into? “

But…

Now that we’ve “picked apart” this question and gone into how it could mean different things, it’s probably safe to say that most folks wouldn’t mind us answering all three different “versions” here for you in this article. 

So, let’s it a try!

Do I get money back if I cancel my term life insurance?

Or phrased a different way…

“How long do I get to review my life insurance policy before I need to decide if I want to purchase it?”

In general, what you’re going is that most life insurance companies will provide an insured a “Free Look Period,” during which an insured will be able to review his or her new life insurance policy “risk-free”.  

It’s important to note that…

An insured will need to make his or her first payment for their insurance to become activated. However, should they decide within a couple of days that they do not wish to purchase the policy for any reason, all “monies” that they have paid to the insurance company will be refunded in full.

We should also…

Make it clear that not all life insurance companies will offer the same “free look” period. Some life insurance companies may be willing to offer a 30-day free look period, while others may only offer a 10-day free look.  

This is why…

You may wish to see a “sample copy” of the policy that you are considering purchasing prior to agreeing to your policy. This can be done right away so that you can have plenty of time to review your new life insurance policy while waiting for your approval.  Unless of course you are applying for a no medical exam life insurance policy  or a final expense insurance policy which could provide immediate coverage in less that 24-48 hours in which case you may want your actual policy emailed to you so that you can review it right away.

Do I get money back if I cancel my term life insurance?

Other times, folks ask this question because they have just recently made a payment designed to cover future coverage like the remaining of the month, quarter, or year and want to know if they cancel now, will they receive any portion of their money back?

In situations like these…

Because you have technically “pre-paid” for future coverage, you will most likely be eligible for the pro-rated portion of your premium, which the insurance company has not earned yet since you are canceling your policy early.  

Now…

You may not receive the full pro-rationed portion you have paid in some situations where a discount was applied to your insurance for making quarterly or annual payments. However, in most situations, any difference in your refund amount will likely be relatively small.

Do I get money back if I cancel my term life insurance?

The last group of individuals who tend to ask this question are usually trying to determine whether or not it makes sense for them to purchase a life insurance policy altogether.

In some cases…

These folks may be questioning where or not life insurance is a “scam” and can’t seem to understand or are struggling to understand how they an insured does receive “something of value” while being insured, even if their family didn’t financially benefit from the insurance that they purchased.

You see…

At the end of the day, most folks who end up purchasing a life insurance policy for their family won’t actually end up receiving a “death benefit” at the time of their death. This is because most folks will end up purchasing a term life insurance policy that will likely expire before they die, or they will end up choosing not to continue paying for their life insurance policy because the “reason” for coverage has gone away.

Which shouldn’t…

Be considered a bad thing. It just means that when you needed to have insurance in place, you were covered, and when that need went away, you stopped making payments. This is what life insurance is for, and it’s why insurance companies are able to offer large life insurance policies are relatively low prices!

Which brings us…

To the part in this article where we like to invite all of our readers to give us a call if they have any questions whatsoever and encourage them always “shop” your options before making any definitive decisions about your insurance needs!

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