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.
Key Summary:
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.
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NobleOak Direct Life Insurance
Protect your family with Life Insurance and pay on average 20%* less when compared with other insurers. T & Cs apply. Consider the PDS. Issuer is NobleOak Life Limited ABN 85087648708. AFSL 247302.
3 Steps to successfully cancelling your life cover
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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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Ask an Expert?
12 Comments
I have a $50,000 term life policy on my husband. I recently discovered what the insurance agent sold me was not what they had promised. So, I stopped auto payments and now they say if I pay past premium they will continue the policy with no other medical exam.
I had this policy for a little over 4 years, paid over $4,400 during this time, can I get my money back? Because the agent said my payments would never go up and that’s the highest amount I could get based on my income. I now know that in 7 years my monthly premium does go up and eventually the annual amount paid will exceed my annual income, is this legal? Help.
Hi Sherry,
I’m a bit confused, as I’m sure you must be too. You mention you have a term policy on your husband, but that the cover you got was limited because of your income. This sounds a bit strange.
Also, I wonder if your policy was on a level premium structure that then converts to stepped premiums. Please give us a call on 1300 743 254 so a specialist can help you find clarity and answer all your questions and concerns.
Usually, you won’t get a refund for premiums paid on a policy that you cancelled or that has lapsed (cancelled due to non-payment). However, please confirm this with our consultants as your particular situation might require investigation.
Dear sir
I had life insurance from 2006 and paid until 2016 May each month.
But Bussiness has gotten worse and I have not been able to pay my premiums since June 2016.
If I continue paying again from this month, will my policy continue and benefits still be available?
Please advice me.
Hi Inhwan.
Generally, if you do not pay your premiums in full within a certain amount of time (usually 60 days depending on the insurer), your policy will lapse. This means your insurance is cancelled due to non-payment and cover will cease.
Because so many months have based, you’ll usually need to purchase a new policy.
Hi. My husband took out a life policy on me. Now we are going through a divorce. I don’t want it to lapse as I took over the payments. We both consent that if it’s possible, to give me ownership of the policy. Is this possible?
Hi Bagavathi,
Generally, yes it is possible to transfer ownership on a life insurance policy. Usually, the current owner, your ex-husband, will need to complete a memorandum of the transfer in which he nominates you as the new policy owner. He’ll need to contact the insurer to get these forms. If you have any questions or concerns regarding this process, please call us on 1300 743 254.
I have had a life insurance policy with met life since 1997, term life USAA since 2003, another policy since 2003 with my state job, which I will retire from in 2 years. Which one do I keep?
Hi Nadie,
Because I’m not aware of the type or cover amount of your policies or you’re personal requirements, for example, do you have financial dependents, I cannot tell you which policy to keep. Please give us a call on 1300 743 254 and a specialist will help you with your decision.
I’ve been off work. Can l get a loan from death insurance?
Hi Susan. Term life insurance has no cash value component and thus loans cannot be made from it. I wish you all the best.
Do you get a refund if you cancel your funeral payment because you cannot afford them anymore?
Hello Patricia,
Generally, neither funeral or term life insurance will refund your premiums when you cancel your policy due to financial constraints. However, annual premiums, when cancelled are generally provided with a pro-rata refund for the remainder of the year, but it is always best to check with your insurer prior to cancelling.
Another option might to decrease your cover amount, thus making your premiums more affordable. Please give us a call on 1300 743 254 for assistance.