Cancelling / Transferring a Policy

When you take out a life insurance policy, you will have (by law) at least a fourteen day 'cooling-off' period. This gives you the chance to reconsider whether or not the policy really fulfils your needs. During this time you can cancel the policy, and if applicable, receive a full refund of any insurance premiums that you have already paid.

You can choose to cancel a life insurance policy at any time, even after the initial cooling-off period, but it may prove a poor decision. In most cases, the likelihood of receiving the same level of cover from a new policy whilst paying premiums at the old rate is slim. This is often because you will be required to pay higher premiums as you get older. For this reason it is important that you consider all your options before cancelling your current policy.

Rather than cancel a policy, you may wish to transfer the cash value of a whole-of-life or endowment policy into a different policy offered by the same insurance provider. This gives you the opportunity to leave the shortcomings of your old policy behind, whilst avoiding costs and money losses incurred when leaving your current provider.

If you do wish to leave your current insurance provider however, you should think carefully about the following aspects of policy cancellation:

• Extra costs involved in purchasing a new policy
• Your increased age which will, in almost all cases, increase the cost of your premiums
• Any new health conditions that will affect the cost of premiums
• Financial reliability and expertise of the new provider
• Loss of money when you cancel your old policy

There are some unscrupulous life insurance providers and insurance agents trading on the market. You are advised to discuss any changes which affect your policy with your family and dependents as well as your current provider before making any binding decisions. Always pay attention to the forms that you are signing: read them through carefully and completely. In addition, be cautious of agents who criticise other agents and companies and make elaborate promises, or who claim that sacrificing the cash value of one life insurance policy for another will always be of great advantage to you: it is important to find an honest insurance provider who does not try to influence your decisions unfairly.

There are times when your insurance provider may choose to cancel your policy: for details, see Pay-Out Refusal.