FOR EXISTING POLICY
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The insurance provider cannot cancel your life insurance policy because of a medical condition that was diagnosed or occurred after buying the policy. If you provide honest information and continue to pay the premiums, the insurance company cannot cancel your policy.
Whether you work a traditional 9-to-5 job or run a business, your existing income might suffice to meet some or all of your family's daily expenses.
However, investing in a life insurance policy protects your family's financial stability in the event of your passing away. It can ease the strain and worries during this challenging period for your family.
The main goal of life insurance is to safeguard your family's financial well-being. However, what happens if you are diagnosed with an illness?
Can a life insurance provider cancel your policy due to illness? Let us find out.
Understanding Life Insurance Policies
While purchasing a life insurance policy, your insurer will first decide whether the applied-for policy must be issued as it is or modified based on your risk profile. For this:
- First, your application undergoes an examination to verify the information provided. You must complete your proposal form meticulously without missing any necessary details.
- Next, you may have to undergo a medical examination, which is conducted only if deemed necessary. This medical examination is generally performed by a physician recommended by the insurer.
- Upon verifying your medical and financial history, you may either receive a counteroffer suggesting changes based on your assessment, or you will be directly offered the life insurance policy.
Life Insurance and Pre-existing Health Conditions
Pre-existing medical conditions certainly affect your insurance application. Insurers usually require a complete disclosure of your medical history, including details and records of any pre-existing diseases.
While this information may result in higher life insurance premiums, failing to disclose it or providing incomplete information before buying a policy is not a viable option. Withholding or concealing health-related facts can lead to many consequences, including:
- Policy Termination: If the insurer accepts your application with wrong or non-disclosed information, it renders the life insurance cancelled once the error is detected.
- Potential Blacklisting: Insurance providers may blacklist individuals who repeatedly provide false or incomplete information or attempt to secure life insurance from multiple providers simultaneously.
- Claim Rejection: The most massive failure in a life insurance plan occurs when a death claim is denied due to false medical information provided on the application form.
Can Life Insurance be Cancelled Because of Illness?
No, the insurance provider cannot cancel your life insurance policy because of a medical condition that was diagnosed or occurred after buying the policy.
As long as you provide truthful and honest information during your life insurance application and continue to pay the premiums, the insurance company cannot cancel your policy.
Moreover, the insurer cannot cancel the policy even if one has developed an unhealthy lifestyle or suffered from other medical illnesses discovered during the ongoing policy term.
How to Cancel Your Life Insurance Policy?
There are mainly two types of reinsurance policies:
Exiting During the Initial Phase
Upon the purchase of a life insurance plan, the policyholder has two initial avenues to terminate the contract as per the usual life insurance policy cancellation rules.
- Using the Free-look PeriodThe insurance company grants policyholders an initial opportunity, known as the free-look period, during which they can opt to exit the policy if they are not satisfied with it.
- Allowing the Insurance to Lapse
Following the free-look period, the sole option for the policyholder to cancel the policy is by letting it expire.
- Using the Free-look PeriodThe insurance company grants policyholders an initial opportunity, known as the free-look period, during which they can opt to exit the policy if they are not satisfied with it.
Exiting During the Initial Phase
Once the policyholder has paid the premium and fulfilled the mandatory three-year lock-in period, the insurance company deems the policy eligible for termination. There are two methods to conclude the policy.
- Policy Termination
As per the life insurance policy cancellation rules, you can also terminate a policy after the obligatory three-year lock-in period has elapsed. The insurance holder has the choice to voluntarily end it before the policy reaches maturity. - Converting it to a Paid-up Policy
nstead of surrendering the endowment policy entirely, the insurance policyholder may opt to convert it into a paid-up policy.
- Policy Termination
Final Verdict
To conclude, the insurance provider cannot cancel your life insurance policy because of a medical condition that was diagnosed or occurred after buying the policy.
To safeguard against unforeseen events, you must consider a life insurance plan that includes critical illness coverage.
Life insurance plans with adequate health riders offer a lump-sum payment if you are diagnosed with one of the specified illnesses listed in the policy.
