Life Insurance Cancellation

December 4 - When taking out life insurance, consumers usually believe that they are doing so for a very long time, and that the only way that the policy will end is if they decide to stop paying premiums.

Consumers are therefore surprised to learn that some life insurance policies can be cancelled by the insurers themselves, and industry experts are advising policyholders to check the small print of their policies to see whether this is the case or not.

One way that life insurers can end an insurance policy is to insert a clause that says that they have a right to cancel it.

Another way is in the case of insurance policies which are in effect renewable on a monthly or annual basis. If this is the case, and the insurer finds just cause to do so, it can notify the consumer that the policy will not be renewed.

When do insurance policies usually decide to cancel a policy?

Funeral policies (both group and individual) are usually the types of insurance policies that might be cancelled by a company. This usually happens when the company feels that the risk is so great that the policy is simply not sustainable.

If the funeral insurance was taken out as a group, it is clear that the insurer cannot cancel the policy of one single member, and will need to cancel the policies of the entire group.

This type of scenario is particularly problematic for older members in the insured group, who may find it next to impossible to find adequate coverage at their age.  For that reason, it is imperative that consumers take these facts into account when considering life insurance.