What if you’ve recently bought a life insurance policy, but then have second thoughts? Are you stuck with the policy? Can I cancel my life insurance and get my money back?
We’ve all heard the term “buyer’s remorse,” right? It refers to the feeling you have when you purchase something that you later decide…for whatever reason…that you are no longer enamored with. Like that new beach towel you bought last week that looks like a giant strip of bacon. Typically, you can return an eyesore like this within a few weeks of purchase (providing you have the receipt, of course), no muss…no fuss. But can this “return policy” work with life insurance?
Can you change your mind after you’ve purchased a new life insurance policy?
Yes. But the time you have to cancel that new life policy is limited. By law, life insurance companies have to offer a free look period, to allow you time to fully examine your policy, risk-free. During this “free look period,” if you’re not happy with your policy, you can cancel it…without penalties…and receive a FULL refund of all premiums paid. This “free look period” is a minimum of 10 days in all states, beginning on the day you receive your fully-insured policy. In some states (and with some insurance companies), that “free look period” can be even longer.
What if I change my mind after the “free look period” is over? Can I still get back some money?
As they say, “the devil’s in the details.” The answer is…sometimes. You can usually get a refund of any “unearned” premium…meaning the premium that hasn’t yet been “used” for any future periods. For example, if you paid annually, and cancel after 90 days, you can usually get a refund (but not at all insurers) for the balance of the year for which you’re canceling.
However, some insurance companies consider premiums “earned as received,” which would preclude any refunds. If you are concerned about this, you can always set up your policy to be paid on a monthly basis. There is NEVER any obligation to pay any premiums for which you haven’t yet paid, so if you cancel a policy that you were paying for on a monthly basis, you won’t be at risk for paying future policy premiums (beyond paying up to the last month before you cancelled your policy).
Again, every insurer is different, so read all the provisions of your policy or ask your agent.
For more information on this issue, talk to us. At AccuQuote, our experienced agents can provide expert answers to any of your life insurance questions.