Can an Insurance Company Cancel Your Policy?
Life is full of “what-if” scenarios: What if I died unexpectedly? Could my family continue to live in our home? Would my children be able to go to college? Would my family have the funds to pay for my final expenses?
That’s where life insurance comes in. Life insurance is something you do to help protect those you love so they don’t suffer financially if your income is no longer there. Life insurance could be the only thing that stands between your loved ones and financial hardship.
There are two types of life insurance: whole life and term life insurance. Typically, whole life provides coverage for your entire life, premiums never increase during ownership of the policy, and builds cash loan value. Term life provides coverage for a limited period of time and after that period, policyholders can let the coverage end or pay increased premiums to continue coverage. Term life is usually less expensive than whole life insurance.
So having life insurance is kind of a no-brainer … but can your life insurance policy ever be cancelled?
Nonpayment
According to nerdwallet.com, there are two reasons a life insurance company can cancel a policy. The first is if you stop paying premiums. If you miss a payment, the company offers a grace period in which you can make a late payment and not lose coverage, but once the grace period is over, the company can cancel your policy1.
Fraud/Misstatement
The second reason an insurance company could cancel your life insurance policy is for fraud or misstatement(s) on your life insurance application. According to insurenow365.com, if an insurance company discovers that the insured made a misstatement on his or her application for coverage – and the discovery is made within the first two years of the policy issue – the insurer can cancel the policy during this time period2.
End of Coverage
Life insurance coverage may end for other reasons, such as the end of a term life insurance policy or if an individual has life insurance through his or her employer and his/her employment ends.
Some companies offer portable insurance coverage, which means if you move or change jobs, the insurance coverage stays with you.
- https://www.nerdwallet.com/blog/insurance/reasons-why-life-insurance-canceled, February 4, 2019
- https://insurenow365.com/best-life-insurance-companies/cancel-policy, February 4, 2019
Categories: Insurance, Accident Insurance, Life Insurance, Term Life Insurance, Whole Life Insurance