Buying a life insurance policy is a little like getting married — it’s a serious, long-term commitment between you and the love of your life (what, you don’t describe your insurer that way?). And, in the case of a whole life insurance policy, it’s literally ‘til death do you part.

Unfortunately, as we all know, not all marriages last. And even those that do are sometimes unhappy. People stray. Their eyes wander. They wonder if they’d be happier with another partner. Er, insurer.

And in those moments, you might find yourself wondering: How do I get out of this relationship? Well, we can’t recommend a good divorce lawyer, but we can answer your question about how to cancel a whole life insurance policy and help make sure you’re getting the best combination of price, service, and extras (like living benefits riders).

So, can you cancel a life insurance policy? To better understand why you might want to cancel or replace a whole life insurance policy in the first place, and what your options are, keep reading.

Why you might want to cancel or replace a whole life insurance policy

Customer satisfaction is a fickle thing, and that is especially true when you’re talking about life insurance. Simply put, a whole life insurance policy is a long-term agreement between you and an insurer. You agree to a premium payment schedule. In exchange, the insurer agrees to pay out the entire value of the policy to your beneficiaries when you die. As a policy owner, your premium payment is determined by a range of factors, including your age, your overall level of health and the value of the policy.

Over time, your policy accumulates cash value — this growth is tax-deferred — and you can borrow against that cash value to pay your premiums or for other reasons. (These loans will reduce the eventual death benefit, and may have tax implications.) It can be complex, and it’s typically expensive — the life insurance premiums for a whole life insurance policy can be anywhere from 5 to 20 times more than those for a term life insurance policy. But when you die, the policy will pay out a death benefit to your chosen beneficiaries.

As a policy owner, there can be a lot of unknowns when you first commit to a policy. Your financial needs might change or over the life of a policy, your regular income might change — you might get a promotion or move into a more lucrative line of work. (Congrats!) Or you might get laid off, or transition to a new career that’s more fulfilling, but with lower compensation. You might buy a house or start a family.

Or consider why you have a whole life insurance policy in the first place: to cover your loved ones’ expenses in the event that you’re not around. Well, maybe those expenses change. Maybe your child earns a scholarship or decides not to attend a four-year college at all. Maybe you pay off your mortgage early. Maybe a mysterious rich aunt names you in her will, which takes the form of a treasure map, which leads you to a suitcase full of unexercised Tesla stock options buried under a rock in an abandoned pasture. (It could happen.) Or maybe, more seriously, something happens to one or more members of your family, leaving you with fewer needs to cover.

The point is, a lot can happen over the years, even decades, you still have in front of you. Your policy needs might evolve. Canceling a policy might seem like a sensible option.

Why replacing a whole life insurance policy is a big decision

In an era of shopping online and getting free shipping and free returns, it can be confusing, even frustrating, to buy something that can’t be easily unbought. When it comes to life insurance, there’s some rationale behind that.

Life insurance started as a community thing. In ye olden times, members of a community would pool together money to take care of families whose primary breadwinner died in a war, or fighting a fire, or by getting kicked by a mule, or was otherwise injured or killed in the line of duty. As communities grew larger, these organizations were formalized, and some even competed with one another, and the insurance industry slowly came into being.

But the original principle still remained — by buying a life insurance policy, you are contributing to a larger pool of money, managed by the insurer, from which payments are made to those who have lost a loved one. To manage that pool as efficiently as possible, actuaries started estimating how long any of us might reasonably be expected to live, and insurers began charging accordingly. In other words, the rate you pay today is designed to help the insurer cover policies well into the future.

Now, imagine if every policyholder, or even a large minority of policyholders, decided to cancel their policies. Suddenly, that pool wouldn’t have as much money in it, which obviously would be a bad thing for those who are counting on it, now or in the future.

Moreover, the insurance industries regulatory bodies are concerned about the risks to consumers. You might remember the predatory loans that led to the crash of the housing market in the 2000s. Imagine if the life insurance industry operated in the same way, with insurers offering cutthroat rates just to pad their bottom line, and without considering the long term consequences of their actions. Again, that wouldn’t be good for anyone — especially those counting on those insurers to take care of them years or decades down the road.

Another thing to consider is that, for most people, you’re not as healthy as you were when you first bought your policy. (And for all people, you’re not as young as you were, unless you’ve recently made some seriously valuable scientific discoveries.) You might find that a replacement policy will be more expensive than your current policy. Moreover, if you cancel your policy without having new life insurance coverage in place, you’re taking a risk that something might happen to you during the gap in insurance coverage — the very thing life insurance is meant to protect against.

When you buy a life insurance policy that lasts for a decade or more, you expect the insurer to be there for you for the long haul. (And rightfully.)

It’s only natural that an insurer counts on the same dependability from you. Stability is essential to the whole system of life insurance. That’s why canceling an insurance policy is not exactly the same as ditching cable or returning a sweater to Amazon. Again, that’s an important reason to do your homework before buying a policy, not after.

So what are my options for canceling or replacing a whole life insurance policy?

While you were moved by our brief history of the life insurance industry, and our explanations for why canceling a life insurance policy could be detrimental to the public good, or potentially cost you a bit of money, you’re still unhappy with your life insurance coverage situation. That’s fair. Here is what you can do.

If you believe you’re overinsured…

If you feel as though you are overinsured, you could always talk to your insurance provider about reducing your coverage, and therefore potentially reducing your premiums. You might also be paying for a rider you don’t want or need. To find out your options, talk with your insurance provider for details.

If you’re still not satisfied, you could look into what is known as a replacement policy. In short (and as the name might suggest), you’ll find and apply for a life insurance policy from a new insurer. If you’re approved, that insurer will notify your current insurer, and brief them on the details of your new plan. Your current insurer will then have a window during which it can try to keep you on your current policy or restructure that policy to meet your changing needs. Sometimes this includes some kind of incentive — think riders and new payment schedules, not discounts. There is then a waiting period, and more paperwork, and all of that is why Haven Life does not currently allow customers to replace their existing policy with one from Haven Life.

So while the industry is certainly competitive — that’s one reason why Haven Life works so hard to offer the lowest possible rates, and to provide such astonishingly precise quotes — those aforementioned regulations also keep it from becoming overly cutthroat. In other words, replacing your policy isn’t like switching cable providers, or cutting the cord altogether. It’s a thorough, time-intensive process, not to be entered lightly.

You could also terminate your whole life insurance policy, in which case you will receive what’s known as the cash surrender value of your policy — sometimes less than the actual cash value of your policy. Some of this money might be taxed as well. Given all that, you might want to talk with a tax advisor before taking action.

If you believe you’re underinsured…

If you’re underinsured, you might be wondering if you can cancel your current policy and replace it with a new insurance product that suits your needs. For all the reasons mentioned above, this is not recommended (or, in some cases, possible). Instead, you can buy additional term life insurance coverage. The good news is you’re likely paying a lower rate on your current policy, since you bought it when you were younger and, likely, healthier. (And again, age and health are huge factors in the premiums you pay for a life insurance policy.) You can keep that lower-priced policy and that lower premium. To get a new policy, you’ll need to apply again. And take a life insurance medical exam again… which in turns means you’ll likely be paying a higher premium for the additional coverage. For some, this will be a small price to pay for the added peace of mind.

At Haven Life, we’ve made it easy to buy additional coverage. Simply apply again using our streamlined online application process. This will all be familiar if you’re already a Haven Life term life insurance policyholder. Note that if you already have $3 million across multiple Haven Term policies, you will not be able to buy more coverage from us. Other limitations include if you started your existing Haven Life term life insurance policy within 90 days, or if you have been diagnosed with a terminal illness since purchasing your initial policy.

So yeah: It’s complicated when it comes to this type of insurance product. But given the stakes — financial protection for your loved ones during the (hopefully many) remaining years of your life — it’s worth getting right.

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