Can you cancel life insurance? (and what happens if you do)

11 min Read Published: 17 Jan 2024

Cancelling life insuranceThe simple answer is yes you can, nothing is stopping you from cancelling your life insurance. If you are wondering whether you should cancel your life insurance, there are a few things you should consider before you do. In this article, we explain how to cancel your life insurance, what will happen if you cancel your life insurance policy, how to reinstate a cancelled life insurance plan and a few things you should consider before you decide to cancel your life insurance.

You can also speak to a life insurance expert* if you would like to review your life insurance arrangements to suit your budget and requirements.

How to cancel a life insurance policy

The simplest way to cancel your life insurance policy is to cancel the direct debit with your bank. Most banks allow you to cancel direct debits online and so theoretically, cancelling your life insurance is a 2-minute job. Make sure that you are cancelling the correct direct debit, you can do this by checking the direct debit reference, as it will usually match your policy number. Life insurance premiums are paid monthly in advance and so you will usually be covered for 30 days after your last premium payment was collected from your account.

The premiums you've paid up to the point that you cancel your life insurance are usually not refunded to you unless you cancel your life insurance within the cooling off period which is usually 14 days from the start of the life insurance policy.

Following the cancellation of your direct debit, the insurance company will normally write to you to advise that they were unable to collect the life insurance premiums; you can either contact them using the details on the letter to confirm the cancellation, or you can simply ignore the letter. An insurance company will usually try and collect premiums once after it is missed but if you did not intend to cancel your direct debit, it is best to call the insurance company to avoid your policy lapsing. See below for the specific rules each insurance company uses for missed premiums.

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Can you cancel a life insurance policy at any time?

Yes. Most life insurance policies provide you with cover against death while you continue to pay your monthly premiums and the cover will lapse if you stop paying. If you cancel your life insurance policy within the 30-day cooling off period

Term life insurance policies which make up the most common types of life insurance bought, are defined as 'pure protection'. That means that the premium you pay is purely protecting your life for the period that you pay your premiums and there is no savings or investment element to the policy. That means if you pay your premiums, you are protected. If you stop paying your premiums, the policy lapses and you are no longer covered. It is similar to other insurance products or services that continue whilst you pay for them such as car insurance. Types of life insurance that are defined as 'pure protection' policies include level-term life insurance, mortgage decreasing life insurance and family income benefit. Check out our article 'Best and cheapest life insurance in the UK' if you are unsure of the type of life insurance you have.

Can you cancel a whole of life insurance policy?

Yes. If your whole of life insurance policy is defined as 'non-profit', then it is as a 'pure protection' product and has no investment element. You are free to cancel it at any time by cancelling your direct debit and the plan will simply lapse. Where this is slightly different is if you have a 'with profits' or 'unit-linked' whole of life insurance policy. With these types of policies, there is an insurance element as well as an investment element. If you cancel a 'with profits' or 'unit-linked' whole of life insurance policy, so long as you have paid the minimum amount of premiums (usually 12 months), the plan will be considered 'paid up'. This means that even though the policy has been cancelled, you will still be covered, however, each month, the policy will have to use the invested element of the paid premiums to service the life insurance element and so the amount you are insured for will reduce each month.

Can you cancel a mortgage life insurance policy?

Yes, you can cancel mortgage life insurance quite easily as it is usually a term life insurance policy that covers your life while you keep paying for it and stops when you stop paying for it. However, make sure you understand the consequences and that you have a plan in place should the worst happen.

Although having a life insurance policy linked to your mortgage is not a legal requirement, the policy is in place to ensure that, should you die, there is a lump sum of money to pay off the mortgage and secure your home. Having a mortgage life insurance policy in place ensures that your family can continue to live in the family home and lead the life that they have become accustomed to.

Cancelling a policy linked to a mortgage should always be a last resort. A better solution would be to shop around to try and get a better deal or reduce the amount that you are insured for, rather than cancelling your policy altogether. We explain how to get the best and cheapest life insurance quotes later in this article.

What is a lapsed life insurance policy?

The definition of a lapsed life insurance policy is a policy where benefits have ceased due to unpaid premiums. A life insurance policy will be 'lapsed' by the insurance company after the first premium has been missed and it may remain lapsed for between one to three months, depending on the insurance company.

Did you know a lapsed life insurance policy can be reinstated?

If your life insurance policy has been 'lapsed' due to missed premiums, then it is likely that you can reinstate your policy by catching up on the missed premiums during a grace period. You will need to contact your insurance company and ask them to collect the unpaid premiums and if you had previously cancelled your direct debit, you will need to set up a new one. Reinstating a policy can sometimes end up being quite expensive, especially if your premiums have remained unpaid for 3 to 6 months. Before you reinstate your policy, it is worth checking how much it would cost to take out a new plan, as it may be more cost-effective as long as your health hasn't changed since you bought your current life insurance. We explain how to do this below.

What is the difference between a lapsed life insurance policy and a cancelled life insurance policy?

The key difference between a lapsed and cancelled life insurance policy is that a lapsed life insurance can usually be reinstated whereas a cancelled life insurance policy usually cannot be reinstated.

A lapsed life insurance policy is a policy that has been placed into a 'lapsed' state by the insurer due to unpaid premiums. A life insurance benefit will not be paid whilst in a lapsed state. A cancelled life insurance policy is a policy that has received an instruction to cease. This could either be by the policyholder (instructing the insurance company that they no longer wish to have the cover) or by the insurance company, advising a policyholder that the policy has been cancelled, usually as a result of continued unpaid premiums or non-disclosure of facts that has been discovered after the policy was started.

If I cancel my life insurance do I get my money back?

No - it is very unusual for life insurance companies to refund your money if you cancel your life insurance. However, there are a few situations when you could expect your money back when you cancel life insurance:

  • You cancel your life insurance within the cooling off period
  • You cancel an over 50s life insurance within the qualifying period 

Some life insurance policies offer cashback after a pre-determined period of time. You can also check whether your life insurance has accrued value whilst you held it in which case there may be a cash-in or surrender value payment.

How each insurance company treats missed premiums to reinstate your life insurance

To reinstate your life insurance policy if you have fallen behind with your premiums, you will need to contact the insurance company and agree to catch these up. However, different insurance companies have different rules around how many monthly premiums you are allowed to catch up with. Policyholders usually want to avoid the inconvenience and the potential increase to their monthly premium should they have to reapply for insurance. It is also worth remembering that if your health or circumstances have changed since you initially applied for your life insurance, this may affect the terms and conditions of a new application.

Reasons to cancel your life insurance policy

Life insurance serves a purpose and a need so a change in your circumstances or plans may mean that it is wise to cancel your life insurance. You should be sure to ensure that you have considered the benefits of keeping your life insurance before you do so as reinstating life insurance is often more expensive and potentially difficult as you get older. Having said that, here are some reasons to cancel your life insurance policy:

  • Your life insurance was bought to pay off a mortgage and the mortgage no longer exists
  • You bought life insurance to financially support a dependant but they are no longer dependent
  • You have arranged life insurance that is more suited to your needs and budget (take care to ensure that the new life insurance is started before you cancel existing life insurance)

How to reinstate your life insurance

Insurance company Rules for reinstating your life insurance if you have missed payment(s)
  • Payments can be caught up within 30 days of when they are due.
  • Payments can be caught up within 30 days of when they are due. You can also defer payments if you are suffering financial hardship for up to 3 months and these can then be spread over the following 9 months alongside your normal premiums. You must speak to Aviva to agree to this.
  • Payments can be caught up within 30 days of when they are due. Payment protection is included as standard with Guardian so if you are too ill to work or you're made redundant, take maternity/paternity your payments can be covered for you.
Legal & General
  • Payments can be caught up within 60 days of the first missed payment. You can take a 3-month payment holiday in instances of financial hardship
  • Payments can be caught up within 60 days of the first missed payment. If you have been an LV member for at least 1 year, you can access the Member Support Team which provides support in situations of hardship.
Royal London
  • Payments can be caught up within 60 days of the first missed payment. You can call Royal London to discuss amending your life insurance to bring the monthly amount down if you are suffering financial hardship.
Scottish Widows
  • Payments can be caught up within 30 days of the first missed payment.
  • Payments can be caught up within 60 days of the first missed payment.
  • Payments can be caught up within 60 days of the first missed payment

Did you know: It may be cheaper to buy a new policy than to reinstate a lapsed policy

Reinstating a lapsed life insurance policy can be expensive. You will be expected to catch up on all of your missed premiums in order to continue receiving your life insurance benefits which, depending on your premiums, can end up costing hundreds of pounds. It may well be cheaper for you to simply take out a new policy. Remember though that the premiums will be based on your current health so if you have suffered any ill-health, it may be better to keep your existing policy.

Life insurance premiums are also based on your age at the time of your application so if it has been many years since you took out the cover, you may find premiums have increased since the time you took it out. That said, it has never been a better time to get a life insurance quote as the cost of life cover has come down in recent years, thanks to advances in medical science (meaning people are living longer) and technology.

If your life insurance policy includes critical illness insurance, take the time to compare any new policy definitions against your existing policy. Sometimes a new policy may look cheaper but the definitions might not provide you with as many chances to claim if you become seriously ill. A critical illness insurance expert* can provide you with a report that will show you the differences between 2 policies.

Should I cancel life insurance to reduce costs?

Here we have provided 3 tips on how to reduce the cost of your life insurance premiums, check out our article 'How can I reduce my life insurance premiums?' for more information and tips.

  1. Don't over-insure yourself - Can you reduce the amount you are insured for or reduce the length of the policy? If you have paid off debt or if your children are older, you may need less cover now than when you originally took out the policy
  2. Make sure you buy the right policy for you - There are many different types of life insurance policies so it is worth ensuring you have the right plan in place. An independent specialist can help you with this and we talk about this in the section below.  Decreasing term assurance, for example, is a policy that will decrease over time in line with your debts and is far cheaper than a level life insurance policy, where the sum insured remains the same. Joint policies can often be cheaper, so if you live with someone and have individual policies, it may be worth considering combining the cover. Critical illness insurance, if included, could be making your policy quite expensive so consider whether you could reduce the level of this benefit to suit your needs and budget.
  3. Get healthy - Life insurance premiums are based on your health at the time of your application so if your health has improved (if you have lost weight or given up smoking) then a new policy may be cheaper. We explain the best way to do this below.

Where to buy the cheapest and best life insurance policy if your policy has lapsed or been cancelled

If your life insurance has lapsed or been cancelled you should speak to an independent life insurance specialist who will be able to look at all of your options. An independent specialist will be able to assess your situation and advise whether it is better to try and reinstate your current policy or to take out a new one. They will be able to compare life insurance quotes from dozens of insurance companies and use their knowledge and expertise to work out the actual premium you will pay, based on your own unique personal situation (such as your current health, your family history, your job and any hobbies or pastimes).

An online comparison site or online life insurance calculator will only ever be able to give you an estimate on the total cost whereas an independent insurance specialist* will speak to the insurance companies on your behalf and get an accurate quote, so you know exactly what you will pay before you apply.

We have personally vetted the services of a specialist insurance broker*, which specialises in finding the most suitable cover for your personal needs. An adviser will also be able to help you fill in the application forms, chase the insurance company on your behalf and even talk you through the process of putting your policy into trust (meaning any proceeds are paid without the need for your beneficiaries to pay inheritance tax).

As a Money to the Masses reader, you'll also receive up to £100 cashback if you end up buying your life insurance this way.

To speak to an adviser, with no obligation to take things further, just fill in the form via the above link. The firm employs strong ethics and will only ever offer a policy if it is the best policy to suit your needs. If they are unable to offer a suitable policy or are unable to save you money then they will recommend that you try and reinstate your policy or recommend an alternative.


If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article - LifeSearch