Quora Answer: Can You Cancel Insurance at Anytime?

The following is my answer to a Quora question: “Can you cancel insurance anytime?”

Yes, you can.  If it is a new policy, you can cancel it during the free look period and there are no financial repercussions.  And if it is an existing policy, you may cancel it by writing in to the insurer.  However, depending on the type of coverage and the nature of the policy, there may be some financial repercussions.

For example, if it is a whole life policy, there may be a refund of premiums, based on the surrender, which is calculated from all premiums paid to date, less owings, premium loan, and distribution costs.  If it is a term life, it does not have any surrender value, and all premiums paid are lost.  If the policy is an endowment policy, you get back the premiums paid less costs, but you may not be entitled to the bonuses since they are conditional upon keeping the policy to term.  If the policy is an investment plan of any sort, the surrender value is based on the value of the underlying assets.  If a policy has been kept for a significant period of time, and the underlying funds have performed well, you might actually get back more than what you paid in premiums.  General insurance plans do not generally have a surrender value, and all premiums paid are lost.