It depends on whether your credit agreement requires the cover. Optional cover can usually be cancelled with notice, subject to your policy terms. Required cover cannot simply be dropped: you need to replace it with another compliant policy first.
First, is your cover required or optional?
Your credit agreement or quotation should say whether you must keep credit life for the term of the loan. If it does, see the section on required cover below. If the cover was offered as an extra, it is optional. If you are unsure, ask your credit provider to confirm in writing. See is credit life insurance compulsory?
If the cover is optional
- Read your policy for the notice period and how to cancel.
- If you took the cover recently, check for a cooling-off period. Many long-term insurance policies give 31 days, but your policy document states the exact period and any refund.
- Cancel in writing and keep proof that you did.
- Confirm the date the last premium will be taken, and ask what refund, if any, applies.
Remember what you are giving up. Without cover, your family, estate or any co-borrower remains responsible for the debt if something happens to you.
If the cover is required
You cannot simply cancel it. Cancelling without a replacement may put you in breach of your credit agreement. What you can do is substitute a policy of your own choice, and the credit provider must accept it if it provides at least the minimum benefits. See can I change my credit life insurer? and can I replace my bank’s credit life insurance?
Before you cancel anything
- Check that no claim is pending and that no insured event has already happened.
- If you are replacing the policy, wait until the new insurer has accepted you and the credit provider has confirmed, so there is no gap in cover.
- Remember that a new policy may start new waiting periods and may exclude conditions you already have.
- Ask for written confirmation of the cancellation.
When you settle the loan
Credit life is linked to the debt, so it normally comes to an end when you settle the agreement. If you pay the loan off early, check that the premium stops and ask whether any refund is due.