Cancelling term life insurance: your comprehensive guide for 2025
12.04.25
8
Minutes
Katrin Straub
Managing Director at nextsure
Are you thinking about cancelling your term life insurance? This step should be carefully considered, as it affects the protection of your loved ones. Find out here what you need to know to make the right decision for your situation.
The topic in brief and concise terms
A term life insurance policy can usually be cancelled at the end of the insurance period; premiums paid are generally not refunded.
Before cancelling, alternatives such as premium-free status or reducing the sum insured should be considered.
A new policy taken out after cancellation requires a new health assessment and, due to the higher age, often leads to higher premiums.
Cancelling term life insurance: key facts at a glance
Cancellation of term life insurance is generally possible, but requires attention to a few points. As a rule, you can cancel the policy at the end of the current insurance period. The exact notice periods, often one month, can be found in your contract documents. Important: With pure term life insurance, you will usually not get back any premiums paid if you cancel. The cover for your dependants ends without replacement when you cancel.
Understanding the reasons for cancelling a term life insurance policy
The reasons for cancelling a term life insurance policy can be varied. Often, the original need for cover no longer exists, for example when the children are financially independent or a loan has been fully repaid. In some cases, financial constraints mean that the monthly premiums become a burden. Another reason may be the desire to switch to a provider with more favourable terms or a better range of benefits. Before cancelling on cost grounds, check carefully whether a new policy really offers advantages, as a higher entry age and a new health assessment often lead to higher premiums. A suitable term life insurance policy adapts to your life circumstances.
The termination process: step-by-step guide
If you want to cancel your term life insurance policy, a formal procedure is required. Follow the steps below to avoid mistakes:
Check the notice period: Refer to your insurance conditions for the exact notice period. A notice period of one month to the end of the insurance period is common. With annual payment, this is often the end of the insurance year.
Draft the cancellation letter: The cancellation must be in writing. Include your name, address, policy number and the desired cancellation date (e.g. “at the earliest possible date”).
Don't forget to sign: The cancellation letter must be signed by hand.
Send by registered post: Ideally, send the cancellation by registered post with acknowledgement of receipt. This gives you proof that it was received by the insurer within the required time.
Request written confirmation of cancellation: In your letter, ask for written confirmation of the cancellation stating the termination date.
Make sure you have new cover: If you are changing provider, take out the new contract first and wait for the acceptance confirmation before cancelling the old contract. This will help you avoid a dangerous gap in cover.
Please note that, in the event of a death benefit payout, the policy must be active.
Financial aspects: Is there a refund if you cancel?
A common question is whether you get money back when cancelling term life insurance. With pure term life insurance policies that do not include a savings element, this is generally not the case. The premiums paid are used exclusively to cover the risk of death during the policy term. No capital fund or surrender value in the classic sense is built up, as is the case with endowment life insurance policies. An exception may be contracts with a special premium structure, in which higher premiums were paid in the first years to be offset later; in such cases, there may be a small surrender value. Find out about the terms and conditions of your life insurance policy.
Alternatives to termination: What you can do instead of resigning
Before you cancel your term life insurance in haste, you should consider alternatives. These can often be more suitable for bridging financial shortfalls or adjusting your cover without losing it altogether. Here are some options:
Premium waiver: You can apply to suspend premium payments for a certain period or permanently. The insurance cover then continues with a reduced sum insured. This is often only possible after a minimum contract term of, for example, two years.
Reduction of the sum insured: Reducing the sum insured leads to lower premiums. This allows you to adapt the cover to a lower level of need.
Deferral of premiums: In the event of short-term financial difficulties, some insurers offer a deferral of premiums for a few months.
Conversion: In rare cases and usually within the first ten years of the policy, term life insurance can be converted into whole life insurance, often without a new health assessment, but with higher premiums. A conversion of term life insurance should be carefully considered.
Change of beneficiary designation: Instead of cancelling, a change of beneficiary designation may be useful if family circumstances have changed.
These options help to maintain at least part of the important cover.
Expert knowledge: Legal foundations and special cases of dismissal
The Insurance Contract Act (VVG) forms the legal basis for cancellations. Under Section 11 VVG, contracts with an indefinite term may be cancelled at the end of the current insurance period, with the notice period having to be the same for both parties (one to three months). Contracts longer than three years can be cancelled by policyholders at the end of the third year and then annually with three months’ notice. A special right of cancellation under Section 40 VVG exists if the insurer increases the premium without adjusting the benefit. You then have one month to cancel. In residual debt insurance, which is often linked to a loan, cancellation may require the bank’s consent or may only be possible once the loan has been repaid. Our expert tip: Check your contract terms carefully for clauses on cancellation and possible surrender values, even though these are unusual in term life insurance. Section 169 VVG governs the surrender value, but is primarily relevant for endowment-type policies. Caution is advised with benefit exclusions in term life insurance.
Cancelling a term life insurance policy has one crucial disadvantage: the insurance cover for your dependants lapses. In an emergency, this can lead to significant financial problems. Another drawback is that, if you take out a new policy later, a fresh health assessment will be required. If your health deteriorates in the meantime, a new contract may become more expensive or even be declined. Higher age at entry also inevitably leads to higher premiums for the same cover. So compare not just the premiums, but take your overall situation and long-term needs into account. Sometimes it is better not to change old insurance policies if the terms are good.
nextsure: Your partner for tailored insurance cover
The decision to cancel a term life insurance policy is complex. At nextsure, we understand that life situations change and are happy to advise you on your options. Our mission as a digital insurance portal is to offer you comprehensive and easy-to-understand insurance solutions. We help you find the right cover for your individual needs, whether that is a new term life insurance policy or another of the many types of life insurance. We support you with our expertise so that you are always optimally protected.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific suggestions for improvement.
More useful links
Wikipedia offers a comprehensive overview of term life insurance.
On Laws on the Internet you will find the exact wording of Section 168 of the Insurance Contract Act (VVG 2008), which contains relevant provisions on the termination of insurance contracts.
The Federal Statistical Office (Destatis) provides current statistics on deaths and life expectancy in Germany, which are relevant for calculating term life insurance policies.
The Deutsche Bundesbank provides comprehensive statistics on insurance companies and the insurance market in Germany.
Stiftung Warentest provides a detailed article on the financial and tax implications of cancelling life insurance policies.
The Federal Court of Justice (BGH) publishes current press releases and judgments that can shed light on relevant legal issues in the insurance sector.
FAQ
How do I properly cancel my term life insurance?
The cancellation must be made in writing (by letter, often also by email) and include your insurance number, name, address, and the request to cancel. It is best to send it by registered mail and request confirmation.
What notice periods apply to term life insurance policies?
The notice period is often one month to the end of the insurance period. With annual payment, this is often the end of the insurance year. You can find the exact details in your policy.
Is it worth cancelling if I’ve found a cheaper provider?
A switch can make sense, but bear in mind: a new policy requires a fresh health check, and your higher entry age usually leads to higher premiums. Only cancel the old contract after the new insurer has confirmed acceptance.
What is loan repayment insurance and how do I cancel it?
A residual debt insurance policy secures a loan. Its cancellation may be subject to the bank’s approval or only be possible once the loan has been repaid. Please check the contractual terms carefully.
Do I lose all the contributions I have paid in if I cancel?
Yes, with pure term life insurance, the premiums are used solely for risk protection. No savings component is built up, so there is usually no refund.
What does premium waiver mean as an alternative to cancellation?
If your policy is made paid-up, you no longer pay premiums, but the insurance cover remains in place with a reduced sum insured. This is often a good alternative to avoid losing cover altogether.
