How Can I Cancel My Life Insurance Policy?
People cancel their life insurance policy for various reasons, for example you might be getting divorce, or your premiums have become too expensive, or your life has changed so dramatically that you need a completely new type of insurance policy.
Whatever your reason, you now want to find out how exactly to go about cancelling and whether you’ll get any money back.
You can cancel a term life insurance policy in Australia at any time, as long as you inform your insurer in writing that you want to end your policy. You should be allowed to cancel at no charge and if you paid your premiums in advance or cancelled during the ‘cooling off period’, you are generally entitled to a refund of those premiums.
Before you cancel your cover, take a few moments to compare quotes from some of Australia’s top life insurance companies to see if you can find cheaper premiums. If you’re retired and looking for alternatives to life insurance, we’ll also help you to compare funeral insurance plans.
3 Steps to successfully cancelling your life cover
Make sure you’re confident you want to cancel. Evaluate your need for life insurance by reviewing your current financial responsibilities. Ensure you have enough money set aside to provide for your dependents in the event of your death.
Contact your life insurance company. You generally can't cancel over the phone. However, you should call them to confirm you have the correct policy information and that you intend to cancel your policy. They'll then make a note of this on your account.
Write a letter expressing your desire to cancel and ask that you receive confirmation that your request has been actioned and your policy stopped.
Another option might be to simply stop paying your premiums and inform your bank to stop any debit orders going off. However, you’ll likely be charged banking fees for bounced debits.
Be sure to review your Product Statement Disclosure (PDS) before cancelling. There may be additional steps that you need to follow, so make sure you read the section about ‘cancelling your policy’ very carefully.
Cancellation forms for life insurance companies we compare
- TAL - Change my details form: Review point number 3.
- AIA - Lost policy declaration form.
- AMP - Application for alteration to policy form.
- Asteron - Cancellation policy.
- OnePath - Application to cancel and replace from.
- BT - Cancellation policy.
- Clearview - Policy cancellation request form.
- CommInsure - Life insurance forms
- MLC - Replacing your existing insurance form
- MetLife - Enquiries for cancellation
While cancellation forms can generally found on your insurer’s website, some insurers might not mandate that you fill out a form, in which case you need to prepare a written statement requesting your cover be cancelled.
What needs to be on your cancellation of insurance policy letter?
- Your full name, surname and date of birth
- The insurer's name and the policy you want to be cancelled
- Your policy number
- The precise date you want your coverage to end
- Whether you are the sole owner of the policy
- The reasons for wanting to cancel cover
- Include the amount of money you expect to receive for premiums paid in advance
- Obtain the signatures of all the policy owners, and
- Include the dates when signatures were provided
- End with your contact details and your desire for a follow-up confirmation
After your policy has been cancelled, you should receive a notice from the insurer advising you of the status.
The consequences of cancelling your life insurance
- You will lose all the premiums that you’ve already paid unless you paid in advance or cancel during the cooling off period.
- You and your family might be financially vulnerable. If you have dependents and pass away without a life insurance policy in place, your family could be left paying for your funeral, outstanding bills, mortgage, and other living expenses.
- Cancelling and taking out life cover later could be more expensive. If you decide to take out cover again in future, your premiums might be higher because you’ve gotten older.
- You might not get accepted. When applying for life insurance later, and your health has gone downhill, then you might be at risk of receiving a policy loading or exclusion or being declined altogether.
Switch Life Insurance Policies
When should I consider cancelling my life insurance policy?
There are circumstances when life insurance doesn’t make sense and cancelling your cover is the better option, for example:
- Your lifestyle has changed dramatically. You've gotten married, started a family or retired and have very different insurance needs that your current policy doesn't provide for.
- When you’re 65 and older and no longer have financial dependents, mortgage payments or outstanding debts, and already have a funeral policy in place.
- You want to replace your policy or switch to a different insurer.
- You’re moving overseas. Generally, life insurance in Australia doesn’t cover you when immigrating.
- You experience buyer’s remorse. If you just bought a policy and after reading the documentation decide it’s not the best fit, then rather cancel during the cooling off period.
Do not cancel your policy if you want to change companies until your new cover has been accepted and commences.
Alternatives to cancelling your life cover
If your reason for cancelling is because you can’t afford the premiums, you have options:
- Change to another insurer: By comparing quotes from other insurers, you might find a cover that's more affordable.
- Reduce your cover amount: Restructure your policy and reduce your insured amount to lower your premiums.
- Premium freeze: Select insurers will freeze your policy at its current premium price to help you maintain its affordability. However, your insured amount will decrease every year as a result.
- Remove CPI increases: You can ask that the insurer removes this built-in benefit that helps your cover keep up with the cost of living.
- Suspending your cover: Select insurers will provide you with the option to suspend your cover when going through financial hardship. When you've become unemployed or need to go on maternity leave, you can temporarily suspend cover and not pay for premiums.
Frequently asked question and answers
If you’re searching for more affordable life cover that is in line with your personal requirements, then start your free online quote comparison of Australia's leading insurers and choose a policy that offers you the most value for money.
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