Cancelling mortgage protection

The free look window

Every state requires a free look period after a policy is delivered, during which you can cancel and receive a refund of premium paid. The length varies by state and product.

If the policy was recently delivered, check the date. Cancelling inside that window is materially different from cancelling after it.

The mistake to avoid

Never cancel existing coverage before replacement coverage is issued and in force. Not applied for — issued, delivered, and active.

Applications get delayed, terms change, and health facts emerge. Families have ended up uninsured in the gap between cancelling one policy and being declined for the next.

Reasons that make sense

• You've found better coverage and it's now in force
• The mortgage is paid off and no other need remains
• You realised it duplicates a term policy you already own
• It was bought under pressure and you're inside the free look period
• The structure isn't what you thought — a lender beneficiary, or a decreasing benefit you didn't want

Reasons to pause first

• Your health has changed since you bought it — new coverage may be harder to obtain
• You're cancelling to save money without checking a cheaper alternative first
• The mortgage is nearly paid but dependants still rely on your income
• It's your only life insurance

How to do it cleanly

• Contact the insurer directly, not the agent who sold it, and ask for their cancellation process
• Put the request in writing and keep a copy
• Cancel any automatic payment only after the insurer confirms — stopping payment isn't cancelling, it's lapsing
• Get written confirmation of the cancellation date
• Ask whether any refund is due, and by when

Lapsing is not cancelling

Simply stopping payment leaves the policy to lapse, which is messier: grace periods, lapse notices, and possible reinstatement complications. Cancel properly and get it confirmed.