What Happens If I Cancel A Life Insurance Policy? 
If you cancel a life insurance policy , first and foremost , the policy will not pay a death benefit to your beneficiary if/when you pass away . If the policy is Term insurance , there is no cash value to collect and no surrender charge to pay , no matter when you took out your policy . However , if you took it out within the year , your agent may lose all their commission from that sale and could be penalized by the insurance company . With Whole or Universal Life , there will be a surrender charge that reduces the cash value you would collect upon cancelling your policy . However , you may be able to roll your full cash value over into a new policy . Or you may have the option to change your policy to a reduced paid-up policy , in which you get to keep some death protection even though you are no longer paying a premium . Discuss your options with your agent ; you may be surprised at the options you have . 