What If I Apply And Decide I Don't Need Coverage?

Life insurance is something that everyone should carry for the fact that everyone has expenses to some extent and everyone will have funeral expenses that will need to be paid. Unless you or your loved ones have a lot of money in the bank to cover final expenses and funeral costs, then you may not need life insurance. This is unlikely, though.

But what do you do when you apply for life insurance, but decide you don't need it? The decision of whether or not you need it is up to you, but you should always consider the consequences of not having it, especially if you have debt. But if you decide you don't need it, you will need to let the insurance company know as soon as possible.

Changing Your Mind

If you apply and then decide you don't need life insurance, you will need to speak to an agent. You can simply call the insurance company and let them know that you want to cancel the application. But how easy this is depends upon where you are in the buying process. If no money has exchanged hands yet, you are in the best position.

However, there are times that individuals will pay their premium and then they decide they don't want it. This could complicate the process a little more, but it is not impossible. You will need to tell the insurance company that you have changed your mind. This will, however, result in some paperwork and a refund of your money.

It may be that the insurance company will send you some paperwork stating that you are canceling the policy. You will then send them back this paperwork before you can get your money back. As for how much money you get back depends upon how far in advance you paid and how far into the process you went before canceling.

For example, if you pay your money one day and you decide you want to cancel the next, you should get all of your money back. This is especially true when you've gone ahead and paid the premium so that the underwriting process could begin and cancelled before underwriting was complete. You were covered for that day, but that is about it. You may have to give up a small prorated amount.

What is Proration?

As for prorated amounts, you usually pay for your coverage in advance. You have different payment options that include paying monthly, quarterly, every six months, or annually. When you've paid in advance, you will get a refund for the amount of time you were not covered. For example, you've been insured for two weeks and paid for a year. You decide you don't want to be covered anymore, so you call the insurance company and tell them.

As a result of this cancellation, you will have to pay for the time your coverage began until the time you are officially not covered. The insurance company will take what you paid for the year and divide it out on a per day basis so that they can determine what they keep and what you get.

Once you complete the cancellation process, you are no longer covered. This lack of life insurance could have financial consequences on your family, so always consider life insurance as an option. Nevertheless, you will find that you can cancel right after you apply or within a short time after coverage kicks in. Good insurance companies like to make sure processes are easy and that individuals have options. The ability to cancel when you want is one of those options.