Can paid for life insurance be canceled?

In grief and not knowing what he was doing, my father canceled a fully paid life insurance policy. When he realized what he had done (a few days later) he called to say it was a mistake. They said it was too late. I believe it was for 200,000 whole life. It didn’t decrease. What happened to that money, and can he get it back? He was living in PA at the time.

  1. 11498 POINTS
    Jason Goldenzweig
    Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
    Traditioanlly, If you canceled a permanent life insurance policy, the carrier would need you to either sign paperwork acknowledging you want to terminate the coverage or they record the phone call (think of the latter as like a voice signature). If there is cash value inside a permanent life policy and the policy is canceled, you are cashing it out (less any surrender charges or outstanding loans against the policy, if applicable).

    Did he receive a check for any cash value or did the carrier indicate they were sending monies?

    How old was the policy and what age was he when he took it out?

    If all routes to put the old policy back in force are exhausted, then you may want to look at an alternative course of action.

    An option to consider to secure new coverage is to use the monies received from the cashed out whole life policy to put towards the premiums for a new policy to substantially reduce the premiums that would be needed for the coverage. If he is much older, then you may want to consider a Guaranteed Universal Life policy instead of a whole life policy. Guaranteed universal life minimizes the cash value buildup to minimize the dollar spent per $1,000 of coverage.

    I hope the information is helpful - please feel free to contact me for help with your coverage and if you have any other questions. Thanks very much.
    Answered on March 24, 2015
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  2. 723 POINTS
    Everett Debrow, Jr.
    Principal Agent, Patriarch Associates,LLC, Opelika, Alabama
    The money is legally your father's, and he should be able to get the cash value upon request. How much he has built in cash value depends on how old he was at policy inception, how long he has had the policy, and how much premium has been paid on the policy. Yours is an issue that your agent may or may not be able to resolve; I would suggest you give him or her the chance to do so.
    Answered on April 7, 2015
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  3. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    You referred to your father living in PA at the time that he cancelled the policy. Did he move shortly after canceling it? If so, the insurance company may have tried to send the cash value from his policy to him, but did not have his new address. I would start by calling the company. It is likely there was cash value in a paid up policy, and it should go to your father.
    Answered on April 9, 2015
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  4. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! My advice would be to contact the company and ask where they sent the cash value for the policy, and /or if it could be reinstated. If it was indeed a whole life policy, and not a term policy, there should be a sizable amount of cash that is due to your father (assuming he'd not borrowed from it) and they would be obligated to return it to him. If it was a term policy, there would have been no cash value, and the policy would have ended.
    If they will reinstate it for you, there will be a bit of paperwork, and back-owed premiums that will have to be paid, and please understand that for whatever reason, insurance companies are much more brutal about reinstating than they are just issuing a new policy.
    It may not hurt to have an attorney...
    Good luck, and thanks for asking!
    Answered on April 14, 2015
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  5. 5877 POINTS
    Stan Cox II
    Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
    The simple answer is yes. If a permanent life policy is fully paid for the owner may take the surrender value of the policy and cancel the policy. Depending on the type of permanent insurance it is it may have accumulated cash value in addition to the benefit amount, which would impact the surrender value. I can't imagine anyone telling an insurance company "Cancel my policy and keep all the money"!
    Answered on May 7, 2015
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  6. 11783 POINTS
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    Larry GilmorePRO
    Agent Owner, Gilmore Insurance Services, Marysville, Washington State
    Can a paid for life insurance policy be cancelled? Yes, by the owner of the policy. You do not mention which state you are in which is unfortunate. The first call should have been to the state office of the insurance commissioner to see if you could reverse the cancelation request. Is there a possibility that your father also cashed the check? If the check has not been processed, there is a possibility, however slight. Unfortunately your father let the company off the hook unless your state has a grace period for cancelations the company has no requirement to take him back.
    Answered on October 28, 2015
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