Cancellable Insurance

Just about everything in life is cancellable (except of course death and taxes). Most kinds of insurance are easily cancellable by the buyer...but insurance companies can also cancel a policy, especially if you quit paying. They have to give you advance written notice of usually 30 days and refund any prepaid premiums.

However, if you want to cancel a whole life insurance policy, that is another story. Those have a "non-forfeiture" clause so you can't just stop making payments and assume it's cancelled. Whole life policies also have a cash value component, so you need to figure out how much cash you have coming to you, if any. Many policies state that if you cancel within the first few years you won't get any cash back, while others will apply a surrender penalty for cancelling. It could start out at 10% if you cancel in year one, and go down to zero if you wait until year 10 or after.

If you do wait the ten years and then stop paying you can take the accumulated cash value, keep the death benefit for a shorter time period, or keep the cash value of the policy and receive a lower death benefit. You could also let your dividends help pay for your premiums if you want to keep the policy and let the cash value continue to grow.