Cancel Term Insurance UAE: Everything You Need to Know

Can You Cancel an Insurance Policy?

Yes, you can cancel your term life insurance policy in UAE. But, you would have to face some implications, depending on when you cancel the plan. Ideally, you should cancel term insurance in the UAE during the free-look period to receive a full refund.

If you cancel your plan after this period, it can result in loss of all the paid premiums. It is because the term insurance policy doesn’t have a surrender value.

Note – It is generally not advisable to cancel your term insurance plan. Doing so will forfeit your benefits.

When Can You Cancel an Insurance Policy in UAE?

Ideally, you should not cancel your term life insurance policy. However, there are certain circumstances that might lead you to cancel the policy. These circumstances are discussed below.

• You can no longer afford to pay premiums. In such situations, the only option left is to cancel the policy.
• Your financial priorities change. If, under your current financial goals, you can no longer pay the premium on priority, you can cancel the term insurance plan.
• You found a better term plan. You can cancel your current insurance policy if you have found a better plan that suits your requirements.

Consequences of Canceling Your Term Life Insurance Policy

Here are the consequences you would need to face if you cancel term insurance UAE —

1. Loss of Financial Security

A term policy provides peace of mind to your loved ones if something unexpected happens to you. This financial cushion, however, is taken away if you cancel or terminate the policy. In this case, your family is left with unexpected costs or lost wages that they might not be able to cover.

2. Refunds and the Free-Look Period

Typically, insurance companies give you a free-look in case you wish to change your mind later on. If you decide to cancel after the free-look period, you will not be refunded any of the premiums paid to that date. This means you lose whatever you paid for the policy.

Potential Higher Premiums for New Policies

If you cancel your policy but later want to purchase a new one, your premiums could be potentially higher than before. This is usually due to increase in age or the development of new conditions.

For instance, let’s say you got a term policy at the age of 25 years but cancelled it. However, at the age of 35, with more dependents, you plan to get a new policy. In this case, your premiums will be higher than those for your earlier policy.

4. Impact on your Financial Planning

Insurance is a vital part for your long-term financial planning. Cancellation of your policy means you may need to alter your financial goals or reconstruct your savings strategy, especially if you're relying on the policy for a safety net.

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