Cancel A Life Insurance Policy

How To Cancel a Life Insurance Policy?

Cancelling life insurance? Explore options like lowering coverage or cancelling within the free-look period for a full refund.

Written by : Knowledge Centre Team

2025-12-10

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11 minutes read

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There are times when insurance buyers get bewildered while purchasing a life insurance policy, and they end up buying the incorrect policy. There’s no such thing as an incorrect policy. But buying a life insurance policy that doesn’t align with your financial goals may turn out to be a poor financial instrument. 

Wondering if you can cancel your life insurance policy? Well, the simple answer is yes- you can. In case you have a life insurance policy that does not match your requirements anymore, there is no obligation to continue that policy for the entire tenure. Almost every life insurance policy includes an exit alternative if the policyholder does not wish to continue the policy. Therefore, before you cancel an insurance policy, you must consider the alternative options. However, rest assured that if these alternatives don’t work, you can simply cancel your insurance policy. If you are wondering how to cancel an insurance policy, don’t worry, we have covered that later in this blog. 

Key Takeaways:

  • Almost all life insurance policies have an exit alternative if the policyholder wishes to discontinue the plan.
  • The free look period allows people to cancel the policy as soon as they realise it’s not their cup of tea without losing any money. 
  • There are many alternatives to cancelling life insurance, such as letting the policy lapse, a life settlement, surrendering, etc. 
  • Insurers can also cancel the plan if the policyholder fails to pay the premium even after the grace period has ended or if they are found to be involved in fraud or deception. 
  • Cancelling a life insurance policy can leave you with no coverage. Try looking for alternatives, such as policy loans to cover financial emergencies if that’s the case.

What is the Free-Look Period in Life Insurance?

Many people are unaware that life insurance policies come with a free-look period, as mandated by the IRDAI's cancellation rules. During this period, policyholders can review their policy and cancel it if needed. It refers to a time allotted to the policyholder to think and terminate the life insurance if the plan does not suit them. It is 15 days from the time of receipt of the policy to check all the terms and conditions. The duration can also extend to 30 days for policies sent electronically or those sent via distance marketing. Cancelling within this period unties you from any surrender charges associated with the plan.

If you have not made any claims during this period, the insurer is bound to pay you all the premiums paid. They may pay you the sum minus any medical examination or stamp duty charges done via the insurer’s end.

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Did You Know?

You can borrow money from the cash value of your whole life insurance policy. However, this will reduce the cash surrender value & death benefit of the policy.


Source: Investopedia

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Reasons for Cancelling a Life Insurance Policy 

Life insurance policies offer the much-required cover of protection to you and your loved ones in case of any unfortunate event. While everyone needs to have a life insurance policy, there can be an array of reasons why you prefer to withdraw your policy. Some of the reasons you can consider cancelling a life insurance policy are: 

  • If you have foreclosed all your existing loans and hold enough buffers to safeguard your family on your own, you can cancel a life insurance policy

  • If you do not hold enough funds to pay the premium amount, you can cancel your life insurance plan.

  • You can also cancel a policy when you think you have purchased the wrong policy and regret purchasing it

  • You have discovered a life insurance plan that extends more dependable coverage at a more economical price

How to Cancel a Life Insurance Policy?

You can cancel or withdraw the life insurance policy, depending on the kind of plan you have taken. While you can easily terminate a term insurance policy anytime you wish, it is more challenging to cancel a whole life insurance policy.

Mentioned hereunder are a few steps on how you can cancel your term life insurance policies and even your whole life insurance policy.

  • Talk to your policy provider: The most suitable way for a life insurance plan cancellation is to talk to your policy provider and inform them why you do not wish to continue with your policy. Informing the policy provider about the cancellation can make the whole process easier.
    Also, if the high amount of premium is the main concern due to which you wish to cancel the policy, then the policy provider can also work out resolving this problem, so that there is no need to cancel the policy.

  • Stop paying the premium amount: If you stop paying the premium amount of your life insurance policy even after the grace period provided by the policy provider, then your life insurance policy will automatically stand cancelled. However, this non-payment of premiums is usually not the right practice, and you must always inform the policy provider about the cancellation decision.

  • Cash out your whole life insurance policy: Cancelling a whole life insurance policy can be a challenging task. If you hold whole life insurance, then, in that case, the best way to cancel that policy is to cash out that policy. The most beneficial part of this whole life insurance is that it has a cash surrender value along with a surrender period.

  • If the policyholder cancels the policy within this surrender period, you can receive the entire sum after deduction of the penalty amount.

  • Cancel the life insurance policy during the free look period: Another way to cancel your life insurance policy is to withdraw it during the free look period. A free look period is a term of 10 to 30 days where the policyholder can cancel the life insurance policy and will get a complete refund of the premium paid without much paperwork.

Here’s all you want to know about a free look period.

Can You Get a Refund When You Cancel a Life Insurance Policy? 

While the life insurance plan cancellation process seems easier, people usually face problems while actually doing so. Hence, before cancelling a life insurance policy, you must keep in mind that even if you are paying the insurance premium for years, you will not receive any amount as a refund.

Apart from this, you will not even get the policy coverage once you cancel your life insurance policy. If you reapply for a new life insurance policy, you will have to go through the complete application procedure again. In addition to this, the policy provisions of the term life insurance policies further hold the right to forfeit the entire premium amount.

Can Your Life Insurance Policy Be Cancelled? 

The insurance company from which you have taken an insurance policy cannot cancel your policy in any case other than the two situations mentioned below.

  1. Non-Payment of the Premium Sum: If the policyholder fails to make the payment for the premium instalment, then the insurance company provides them with a grace period of 30 days. In case the policyholder does not pay the premium even in that grace period, then, the insurance company holds complete rights to cancel your life insurance policy.

  2. Deception: Another situation in which the insurance company can cancel a life insurance policy is when they find out that the policyholder has committed fraud or deception. If you wrongfully claim your death for the coverage amount, the insurance company can cancel the policy and also file a case of fraud against that person. Therefore, you must provide accurate information as failing to do so may lead to rejection of your application.

Steps to Cancel/Surrender Your Life Insurance Policy With Canara HSBC Life Insurance 

There are two main ways to terminate your life insurance policy with Canara HSBC Life Insurance: cancellation during the free-look period and policy surrender. Here's a breakdown of both:

  • Cancellation During Free-Look Period: This is your window to cancel the policy if you're not satisfied with it, usually within 15 days of purchase (30 days for electronic policies or those bought remotely). You'll receive a full refund of the premiums paid.

    1. Here's what to do:

      • Contact Canara HSBC Life Insurance: Reach out to their customer service department by phone (toll-free at 1800-258-5899) or email (customerservice@canarahsbclife.in).
      • Inform Them of Cancellation: Clearly state your intent to cancel the policy and the reason behind it.
      • Submit a Written Request: Follow up with a written cancellation request, mentioning your policy details.
  • Policy Surrender: If you're outside the free-look period, you can surrender your policy, but you won't get the full amount back. Canara HSBC will deduct surrender charges from the premiums you've paid.

    1. Here's the process for surrender:

      • Check the Policy Terms: Review your policy documents to understand the surrender value and any applicable charges.
      • Contact Canara HSBC: Get in touch with Canara HSBC Life Insurance (same methods as above).
      • Request Surrender Form: Ask for the policy surrender form.
      • Complete and Submit the Form: Fill out the form and submit it along with the required documents, which typically include:

        • KYC documents (photo ID, address proof)
        • Bank account details (proof like a copy of your passbook or cancelled cheque)
        • Original policy document

Important Note: Surrendering a policy can mean losing out on potential benefits that accumulate over time. Consider exploring alternatives like a policy loan before surrendering.

Things to Keep in Mind While Cancelling Your Policy

There are certain points to consider when cancelling a policy. It is essential for a seamless flow of the procedure.

  • Clarify all your doubts about the free look period and life insurance policy cancellation rules before making the big move.
  • Check the timeframe carefully to ensure you cancel it as soon as you can and possibly within the free look period. 
  • Be aware that insurers may deduct medical examination fees or stamp duty from the premium paid refund, even if you properly surrender the policy.
  • Keep the documents of the cancelled policy intact; it might be useful in the future. 
  • Cancelling a life insurance plan can leave you with no cover, so be vigilant with your choices. 
  • Lastly, if you are planning to replace the plan with another, make sure to compare both and then make the final decision thoroughly. 

Wrapping Up

Life insurance policies are a positive move towards long-term economic devising and protecting your family. Hence, you must ensure that you never decide to purchase a life insurance policy in haste. iSelect Smart360 Term Plan by Canara HSBC Life Insurance is one of the best life insurance plans in the country. It provides comprehensive life coverage till the age of 99 years and all that at the most affordable monthly, quarterly or annual premiums.

Glossary:

  • Whole life insurance: Combination of life insurance coverage with a savings component. The cash value grows over time and can be accessed through loans or withdrawals.
  • Cash surrender value: The amount of money that a policyholder can receive if they cancel their life insurance.
  • Surrender period: A period of time, typically a few years, during which the cash surrender value of a whole life insurance policy is less than the total premiums paid.
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Uncertain About Insurance

FAQs

It depends on your insurance company. While some insurers allow you to initiate the cancellation process online, others might require you to contact them directly by phone or email. It's always best to check your insurer's website or contact customer service to find out their specific cancellation procedures.

It depends on when you cancel your policy:

During the free-look period: Most life insurance policies come with a free-look period (typically 10-30 days) where you can cancel the policy and receive a full refund of your premiums.

After the free-look period: If you cancel your life insurance outside the free-look period, you will likely receive the cash surrender value of the policy, which is usually less than the total premiums you've paid. The earlier you cancel, the lower the cash surrender value will be.

The time it takes to receive a refund on your life insurance policy will vary depending on the insurer. It typically takes a few weeks to process the cancellation and issue the refund.

Yes, you can cancel your current life insurance policy and switch to a different insurer. However, keep in mind that you will likely lose some money if you cancel outside the free-look period. You will also need to go through the application process again for a new policy, which could involve a medical exam.

Yes, but with conditions. You can certainly cancel (or surrender) a life-insurance policy after it’s been issued. However, whether you get a refund, and how much, depends on when you cancel.What charges or deductions apply if I cancel my life insurance after the free-look period?

The “free-look period” (or “free-look cancellation”) is a short window soon after you receive the policy document, during which you can return the policy if you don’t like the terms or for any other reason.

To cancel or surrender a life insurance policy under the latest IRDAI guidelines, review your policy to see whether you are still within the free-look window or if you qualify for a surrender value after paying premiums for a few years. Next, apply for cancellation through your insurer by filling out their official form and submitting it along with ID proof, bank details, the original policy document, and any other required paperwork. Keep in mind that surrendering after the free-look period involves deductions, though updated rules now provide more balanced payouts, higher for some non-ULIP plans), and a written request is essential for processing.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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