Can I cancel my life insurance and get a refund?
Thinking about cancelling your life insurance policy? Whether your circumstances have changed or you're simply reviewing your finances, it's important to understand what cancelling means, and whether you’ll get any money back. In this guide, we explain how cancellations work, what to expect depending on your policy type, and the key things to consider before making a decision.
Contents
- Can I cancel my life insurance policy?
- Will I get my money back?
- How do I cancel my life insurance policy?
- Alternatives to cancelling a life insurance policy
Can I cancel my life insurance policy?
The simple answer is yes, you can cancel your life insurance, critical illness cover or income protection policy, at any given time. While protection insurance is usually taken out with long-term peace of mind as the goal, circumstances change, and so do financial priorities.
Cost is a common reason people cancel their cover. But before you do, it’s worth speaking to your insurer or adviser. You may be able to adjust your policy, such as reducing your cover, rather than losing it altogether. This can help you stay protected without starting from scratch later, when premiums may be higher or cover harder to secure due to age or health changes.
Cancelling might feel like the right move now, but it’s important to understand the long-term impact.
Will I get my money back?
Whether or not you’ll receive a refund when cancelling your life insurance depends on a few key factors, including the type of policy you have, how long it’s been active, and the terms set by your insurer.
In most cases, term life insurance policies do not offer refunds if cancelled after the initial cooling-off period. The premiums you’ve paid cover the time you were insured, and once cancelled, that money isn’t returned. However, if you have a whole of life or investment-linked policy, there may be a cash value built up over time. If so, you might receive a partial payout, minus any fees or charges.
All life insurance policies come with a 30-day cooling-off period. If you cancel within this time, you’re typically entitled to a full refund of any premiums paid, providing no claims have been made. This gives you a chance to review your policy and change your mind without financial penalty.
Outside of the cooling-off period, refunds are rare unless your policy has a cash value component. Even then, any refund will usually be reduced by administration or early withdrawal fees. It’s important to check your policy documents or speak to your adviser to understand what applies in your case.
How do I cancel my life insurance policy?
We’d always recommend speaking to your insurer or adviser first before cancelling your direct debit. They can talk you through your options, help you understand the impact of cancelling, and may even be able to adjust your policy to better suit your needs or budget.
If you do decide to cancel, there typically aren’t any fees or charges involved.
Alternatives to cancelling a life insurance policy
If your needs or circumstances have changed, you may be able to reduce your level of cover or policy term. Some insurers also offer flexible payment options or short-term support if you're struggling financially.
Before making any decisions, it’s a good idea to speak with your adviser or insurer. They can help you understand your options and find a solution that keeps you and your loved ones protected, without having to start from scratch later on.
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A ‘Searcher since 2015, John is a Protection expert having worked in our customer facing teams and best practice teams, and now is immersed in Protection Content and Marketing.See all articles by John Rogers
Frequently asked questions about cancelling policy
If you cancel your life insurance, you usually won’t get your premiums back, as they cover the time you were insured. However, if you cancel within the 30-day cooling-off period and haven’t made a claim, you’ll typically get a full refund. Outside that period, refunds are rare unless your policy has a cash value (like whole of life or investment-linked policies), in which case you may get a reduced payout after fees. Always check your policy or speak with your insurer or adviser for details.
Yes, in most cases, you can make changes to your life insurance policy, especially if your personal or financial circumstances have changed. Common updates include:
- Adjusting your level of cover (increasing or decreasing the payout amount)
- Changing the policy term (how long the cover lasts)
- Updating beneficiaries or switching to a different provider
Some insurers allow changes without medical reassessment, particularly after major life events like marriage, having children or moving home. However, changes may affect your premiums and not all policies are flexible, so it’s important to check your policy documents or speak with your adviser before making adjustments.
An Investment-Linked Policy (ILP) is a type of life insurance that combines protection and investment. Part of your premium goes toward life insurance coverage, while the rest is invested in a range of funds of your choice. The value of your policy can grow over time based on the performance of these investments, but it can also go down, meaning there is a degree of risk involved. You can typically adjust your coverage or switch funds as your needs or risk appetite change.
They’re often chosen by people who want both life cover and the potential to grow their wealth, but they may not be suitable for everyone.
Most life insurance policies don’t offer the option to pause payments without affecting your cover. If you stop paying premiums, your policy could lapse, meaning you’d no longer be protected and might need to reapply in the future – potentially at a higher cost or with new health checks.
However, some policies may offer flexibility, such as a short payment holiday or reduced cover for a period. It depends on your provider and the type of policy you have, so it’s always best to check your policy or speak to an adviser.
No, cancelling your life insurance policy won’t affect your credit score. Life insurance isn't a credit product, so starting or ending a policy doesn’t get reported to credit reference agencies.
If you're thinking about cancelling, it's worth reviewing your options first – especially to make sure you don’t lose valuable cover you might need later. A LifeSearch adviser can help you talk it through.
No, life insurance policies can't be transferred directly from one insurer to another. If you want to switch providers, you’d need to apply for a new policy with the new insurer and cancel your existing one.
Before doing that, it’s important to consider a few things:
- You may need to go through new health and lifestyle checks
- Your premiums could be higher depending on your age or health changes
- You might lose certain benefits or cover you've built up in your current policy
If you're thinking about switching, speak to a LifeSearch adviser first. We can help you compare options and make sure you're not left without cover during the process.
Not necessarily. Before cancelling your life insurance after a divorce or separation, consider whether your financial responsibilities have changed. Life insurance can still provide important protection, like covering debts or supporting children. Review your policy and your current needs, and talk to your insurer or adviser to decide the best option for your situation.
It’s also a good time to review any trust associated with your policy to make sure the money will go to the people you want it to. If you don’t already have a trust in place, we strongly recommend setting one up, especially if your beneficiaries or family circumstances have changed.
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