Can Life Insurance Be Canceled Because of Illness?

Life insurance plans are considered one of the safest financial products as they provide a death benefit in case of your unfortunate death during the policy term or a maturity benefit if you outlive the policy tenure. They are also a great way to save on yearly taxes and create wealth to beat inflation. Most of the plans provide their customers with the option to cancel their policy at any time but there are also certain conditions under which the insurer can cancel your policy. In this article, we will see if your life insurance can be canceled because of illness by your company.

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Reasons Your Insurer Can Cancel Your Life Insurance Policy

Here is a list of all the reasons for which the insurance company can cancel your life insurance policy

If you fail to pay the premiums within the grace period

The grace period is the additional period provided after the end of the premium due date during which you can pay your premiums without worrying about policy lapse. If you fail to pay your due premium even after the end of the grace period your policy will be canceled and you will not be eligible to receive any policy benefits.
Providing Inaccurate information while filling out the application form

Lying about personal details can get your life insurance canceled as it violates the ‘utmost good faith’ factor of the contract. If you misstate or lie about an existing health condition or medical history while filling out the policy form the insurer can cancel your life insurance policy.

Can Life Insurance Be Canceled Because of Illness Diagnosed after the Policy Purchase?

No, the life insurer cannot cancel your life insurance policy for an illness diagnosed or that occurred after the policy purchase. The company cannot cancel your plan even if you have started unhealthy habits like smoking or drinking, have suffered a personal injury, or have other medical issues that have been discovered during the policy term.

How Can You Cancel Your Life Insurance Policy?

Here is how you can cancel your life insurance plan

If you want to cancel your life insurance plan you have to contact the insurer and express your wish to terminate the policy.
The insurance provider will offer other alternative solutions to you for you to weigh your options.
If you still want to cancel your life insurance you can download the company’s cancellation form from the company’s website or branch office.
Fill out the required details, attach the required documents, and submit the form to initiate the cancellation process.

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Wrapping it Up!

Life insurance companies in India provide policyholders the option of canceling their life insurance policy within the free-look period and receiving the entire premium paid back at the end. However, your life insurance policy can be canceled because of illness by the insurer if the information provided by you at the time of policy purchase is found to be inaccurate or misleading. Make sure to provide the correct information at the time of buying the life insurance plan to avoid any future inconvenience.

FAQ's

What is the reason for the cancellation of a life insurance policy?

Ans: The most common reason for policyholders to cancel their life insurance policy is due to the unaffordability of the premiums. Apart from that, you can cancel your life plan if you feel you no longer need to be covered under the plan.
Can my life insurance company cancel my policy?

Ans: Your insurance company can cancel your life insurance if you have not provided the correct information on the application form. The policy can also be canceled due to non-payment of premiums or if you voluntarily cancel your policy. The insurer cannot cancel your policy after 3 years from the date of the policy issuance/date of policy revival, as per section 45 of the Insurance Act, of 1938.
Do you get any money back if you cancel your life insurance?

Ans: You can get a refund of all the premiums paid if you choose to cancel the life insurance during the free-look period. The amount returned will be subject to some deductions like administrative fees, and the cover for the days the policy was in force. However, after the end of the free-look period, you will not be eligible to get any returns.
What will happen if I cancel my life insurance plan?

Ans: If you cancel your life insurance plan after the end of the cooling-off period, you will receive the cash value applicable as per the policy T&Cs. But for a term life insurance plan you will not receive any payout.