Can I cancel my policy after paying my premium? Will I receive a refund

There are many instances you might consider canceling your life insurance policy:

• You might no longer need it (for example, your kids are out of school or your mortgage is paid off).
• You can no longer bear the premium costs.
• You’re not satisfied with the features and benefits of the plan. 
• You have found life insurance coverage at a better rate.   

The process of canceling your life insurance policy differs depending upon what kind of life insurance policy you have. Canceling term insurance is generally easier than canceling whole insurance. You can cancel your life insurance policy at any time, but the question here is whether you will get your money back or not.

All insurance policies have a free-Look period. The insured will be allowed a period of 15 days (or 30 days) from the date of the policy issued to review the terms and condition of the policy and return if not accepted. If the insured has not made any claim during the free look period, then he shall be entitled to a refund of the premium paid less any expenses incurred by the insurer on medical examination of the insured persons and the stamp duty charges.

But when you cancel the plan after the free-look period, then the premiums are deducted depending on the type of the plan.

• Term Life Insurance — Term life insurance policy does not have any refund on cancelling nor do they have any surrender value.
• ULIPS — You can cancel or surrender your policy but since it has a lock-in period of 5 years any amount to be refunded will be given only after the lock-in period with standard deductions.
• Money-back policy — When you cancel the policy after the free-look period then you might have to pay heavy charges depending on your insurer with no refund.
• Whole life insurance — Only if you have cash value on your policy then you might get some refund on cancellation less any applicable surrender charges and administration fee. Otherwise, whole life policies do not provide a refund on premiums paid.