Canceling your final expense policy is generally easy, but likely means that you will have to give up the money you put towards it. However, you will not likely be charged a cancellation or surrender fee for doing so. Here are some of the things you need to know about canceling final expense and how to fix it.
Why Cancel Your Final Expense Policy?
If you are considering canceling your final expense policy, you first need to ask yourself, “how did I get here?” Understanding why you want to cancel can help you better prepare for what happens next or avoid cancellation altogether.
More often than not, the cancellation has to do with money—either you have enough money to no longer need or want final expense, or you have fallen on hard times and no longer feel you can afford its premiums.
How to Cancel
What does it look like to cancel your final expense policy? Well, there are a few ways to go about it. One very simple (perhaps unplanned) method is to simply stop making premium payments.
If you stop paying for your policy, your coverage will eventually be suspended by the insurance company. Perhaps this is unavoidable if you cannot make payments, or you may do so to purposefully cancel the plan. Generally speaking, however, this is not recommended.
The best way to cancel is to call your insurance provider. Let them know you would like to cancel, then just follow their instructions.
Are There Surrender Charges with Final Expense?
A surrender charge is issued when a life insurance policy is canceled prematurely. There are two different definitions of surrender charges—one specifically for investment policies, and one thought of generally as a cancellation fee.
Final expense is not considered an investment annuity or policy, so any surrender charges fit into the second definition. Most insurance companies will charge some sort of fee depending on their rules and your circumstance. However, if you are willing to pay a few months worth of premiums after cancellation, this fee is greatly reduced. As long as you cancel smartly, this fee should not be too high.
Alternatives to Canceling Your Final Expense Policy
If you cannot make payments, perhaps you can take advantage of a policy lapse to get back on your feet. There is a grace period for all insurance policies, meaning that you can fail to make premiums for a certain amount of time.
You may also choose to make changes to your policy, such as choosing a lower death benefit, in order to reduce costs while still keeping the coverage. You can also always speak with your insurance agent or company to see if they can help in any way.