Can I Cancel Anytime?
When purchasing a senior life insurance plan, there are a lot of questions to ask before, during, and after the policy is purchased. One of the questions that often comes up after the policy is purchased is, “Can I cancel this policy at any time?” Most seniors are not asking this question because they intend to cancel the policy in the near future. They simply want to ensure that they understand the terms and conditions of the contract.
The answer to this question is pretty straightforward as the vast majority of policies purchased can be canceled by simply stopping your monthly payment or notifying the insurance company that you no longer need the policy.
Let’s look at some of the popular reasons why life insurance policies are canceled and factors to consider before canceling a policy.
The first and most popular reason for policy cancellation is due to cost. Most of the individuals that we deal with are retired or on a fixed Social Security income, and unexpected bills or financial situations can arise. When they do, life insurance is one of the more common areas to be eliminated.
If you find yourself in a financial crisis, there are a few questions to ask. Can you afford to replace the life insurance policy once this financial crisis is over? Has your age or health changed substantially since the original date of policy purchase? Is the policy you originally purchased still available? Any of these factors can cause a future policy to be more expensive or potentially unattainable due to your current health situation.
Before canceling a policy, explore all of your options. Can you potentially reduce the policy amount, making the monthly payment more affordable? Another option is to reach out to family members for assistance. While this may not be a comfortable conversation, family assistance with your monthly payments now could prevent a much larger financial burden should you pass without having a senior life insurance policy in place.
The second reason people cancel policies is that they have replaced the original policy with another policy. This is not a problem. However, you should ensure that you’re getting a better policy at a cheaper price.
There are three main factors to consider when comparing policies. The first factor is the policy waiting period. If a waiting period exists, the insured must have the policy in place for traditionally two to three years before it would pay out the full death benefit. If the insured passes away during the initial two to three year waiting period, the insurance company would simply return the monthly premiums plus interest.
Another factor to evaluate is whether the monthly premium of the policy you’re being quoted is fixed for the life of the policy. If you’re changing policies because you feel like you’re getting a cheaper price for the same policy, ensure that the monthly premium payment will not change as you age.
The third factor is to ensure that the policy does not cut off at a certain age. Several burial insurance companies offer policies that terminate at age 80 or 85. This could leave you in a difficult situation should you outlive the policy.
If any of these factors apply to the policy you’re considering, be sure to weigh the pros and cons before making the final decision.
The final reason people seek to cancel a senior life insurance policy is simply that they feel they no longer need the policy. For instance, if the policy was purchased to pay off lingering debt should someone pass away, the person may feel the policy is no longer needed now that the debt has been paid back.
In a situation like this, we would suggest you confirm that there is no other use for your current policy. For instance, can the policy be used to cover your final expenses? Is it worth keeping the policy to provide a financial benefit to those left behind? Could you potentially incur medical costs prior to your passing that the policy could subsidize? Though your current financial situation may be stable, it’s worth considering the future what-ifs prior to canceling the policy.
Hopefully, this information can provide some guidance in your decision-making process. If you have additional questions or concerns, you can speak to one of our licensed insurance professionals. If we don’t have an answer for your specific question, we can at least point you in the right direction. We are licensed throughout the country and would be glad to assist in any way that we can.