Introduction
Legal & General is one of the UK’s largest providers of life insurance. They offer a range of policies to provide financial protection for your loved ones in the event of death or terminal illness. However, there may come a time when you need to cancel your Legal & General life insurance policy because it is no longer suitable or affordable. This comprehensive guide will walk you through the cancellation process step-by-step.
Reasons to Cancel A Legal & General Policy
There are several situations where cancelling a Legal & General life insurance policy makes sense:
- You no longer need the cover – Major life events like repaying a mortgage, children becoming financially independent or retirement may remove the need for the same level of cover.
- You can’t afford the payments – Losing your job or income can make premium payments unaffordable. It’s better to cancel than have a lapsed policy.
- You find better cover for less – You may find alternative policies with lower premiums and equivalent or better coverage.
- You have a claim dispute – Dissatisfaction with how a claim was handled may prompt you to take your business elsewhere.
- You need different types of cover – Your needs may change requiring you to switch to a different form of insurance rather than life insurance.
Always carefully consider if cancellation is the right move before terminating a policy.
How To Cancel A Legal & General Life Insurance Policy
Cancelling a Legal & General life insurance policy is relatively straightforward. Follow these key steps:
1. Review Your Policy Documents
- Check your policy schedule and terms and conditions to see if there are any exit fees or encashment penalties for cancelling early. This may impact any payout you receive.
- Understand if you are within the policy ‘cooling off’ period, usually 30 days from purchase. Cancellation within this window generally provides a full refund.
2. Contact Legal & General
- Call Legal & General directly to notify them of your intent to cancel. You can also submit cancellation requests by email or post.
- Specify if you are cancelling within the cooling off period or after.
- Request any applicable cancellation or surrender form that needs to be completed.
3. Complete Any Required Forms
- Legal & General may require you to complete a cancellation request form or surrender the policy documents.
- Forms are available on their website or can be sent to you directly.
- Return any completed forms promptly to avoid delays.
4. Get Confirmation of Your Cancellation
- Legal & General will confirm once they have processed the cancellation and closed your policy.
- Store this documentation along with your original policy documents for future reference.
- Cancellation usually takes effect within 30 days from receipt of request.
- Any refund owed will be issued to you at this time if applicable.
5. Consider Alternatives
- Be sure to have a new policy or alternative cover in place if still needed before cancelling Legal & General cover.
- You may be able to make changes like reducing cover amount rather than fully cancelling.
- Seek financial advice to ensure cancellation aligns with your needs.
What Happens at Cancellation?
The specific cancellation outcomes depend on the individual policy terms but often include:
Impact on Premium Payments
- No further premiums are owed after the cancellation date.
- Some portion of unused premiums may be refunded to you if cancelling mid-policy term.
Loss of Cover Benefits
- All policy coverage and benefits will end for you and any other covered lives.
- You lose the future financial protection the policy would have provided.
Surrender or Cash Value
- You may receive a cash payout representing the surrender value if you cancel after the cooling off period.
- Surrender value depends on how long the policy was held and type of policy. Entire premiums paid will not be recovered.
- Some policies have no surrender value or encashment penalties which reduce payouts.
Be clear on what you may receive back when cancelling an active in-force policy to avoid surprises.
Alternatives to Full Cancellation
Before cancelling your Legal & General cover, consider these options to retain some coverage:
Reduce Coverage Amount
- Decrease the sum assured to a level more aligned with your current needs and ability to pay.
Change Premium Frequency
- Adjust from monthly to annually to reduce administrative fees and premium costs.
Make it Paid-up
- Stop paying premiums but retain coverage at a reduced paid-up amount.
Take a Premium Holiday
- Temporarily pause premium payments for a defined period with consent of the insurer.
Apply Cash Value to New Policy
- Instead of surrendering the policy, use accrued cash value to purchase a new slimmed down policy.
Discuss alternatives with Legal & General to find the right balance between cost and retained cover.
Impacts of Cancellation on Different Policy Types
The implications of cancelling before the maturity date can vary for different Legal & General policy types:
Term Life Insurance
- Little to no cash value received when cancelling since premiums only cover cost of term.
Whole Life Insurance
- Accumulated cash value can be surrendered, but penalties may apply for early cancellation.
Endowment Policies
- Built up cash value will be paid out, but full projected maturity value will not be received if cancelled early.
Mortgage Life Insurance
- Check if policy was a requirement of the mortgage. Lender permission may be needed to cancel if mortgage still active.
Family Income Benefit
- This provides a replacement income for family so cancelling leaves them without this financial support.
Check your specific policy documents and speak to Legal & General to clarify cancellation impacts.
How Cancellation Impacts Other Policyholders
For joint or group policies, cancellation gets more complicated:
- Named policyholders can enact cancellation, impacting coverage for other members.
- However, some group policies require unanimous consent from all parties to cancel.
- Joint policyholders should discuss cancellation implications and agree on the decision together.
- Anyone removed from a cancelled policy can apply for individual cover if still needed.
When cancelling group or joint policies, issues around loss of cover for other parties need to be carefully considered and communicated.
Best Practices for Cancelling
Follow these tips to ensure smooth and efficient cancellation:
- Inform Legal & General early on of your intent to cancel to allow proper processing time.
- Be responsive to any requests for additional information or forms to expedite cancellation.
- If surrendering a policy with cash value, opt to receive payout by direct deposit for faster processing.
- Keep records of all cancellation documentation including confirmation from the insurer.
- Monitor that any expected refunds or payouts are received in a timely manner after cancelling.
- If cancelling one Legal & General policy, evaluate if other policies still meet your needs.
- Provide any feedback or concerns about the cancellation experience to Legal & General to help improve their policyholder services.
Next Steps After Cancellation
Once you have cancelled your Legal & General cover, be sure to take these steps:
- Shop for a replacement insurer if you still require life insurance. Get quotes to compare pricing and cover details.
- Update your beneficiaries on any new policies if replacing your previous coverage.
- Destroy and securely dispose of any old policy documents to avoid potential identity theft.
- Review your finances to adjust for savings from lowered insurance costs going forward.
- Consult your financial advisor, accountant or solicitor to discuss implications of policy cancellation on your overall plans.
- File your cancellation documentation along with records of your previous policy for future reference.
Closure
Cancelling a Legal & General life insurance policy requires careful consideration but can be done with minimal hassle. Follow the proper cancellation steps, evaluate alternatives to closing the policy, and be informed on how cancellation may impact payouts or coverage for other policyholders. With proper diligence, you can smoothly transition to new coverage options or financial arrangements after cancelling your Legal & General insurance.