When Should I Cancel My Term Life Insurance? 
It depends on the status of the policy , your need , and other available options to you . Most people will cancel a term policy when the initial period of premium guarantee expires -LRB- your term length -RRB- or they have replaced it with a new policy . Life insurance creates cash upon the death of the insured . Those that simply cancel their life insurance policy because they think they no longer have a need for coverage may not think about many of its other uses . Just because the big debts are paid off -LRB- e.g. mortgage , cars , etc. -RRB- does n't mean the need for life insurance is over . Many people want to have coverage in place for estate planning purposes , income replacement -LRB- so your family can continue their current lifestyle and not have to make drastic changes due to personal finances -RRB- , leaving a legacy to your loved ones , or paying burial expenses and unexpected medical bills surrounding the event of death -LRB- e.g. going to the hospital -RRB- that you just do n't anticipate . When a period of guarantee expires on a term insurance policy , one of two things will happen : 1 -RRB- the policy will change to annual renewable term insurance and the premiums will increase each year -LRB- based on age -RRB- or 2 -RRB- the premiums will remain the same and the death benefit will decrease each year -LRB- generally seen on term UL policies - term insurance on a universal life chassis -RRB- . Another reason to continue having life insurance in place is to protect your insurability . For example , if you 've got preferred plus rates and had a heart attack or cancer while your policy is active , you 're not gon na be getting those preferred plus rates again , meaning if you wanted to get another life insurance policy in the future , you would be paying a whole lot more in premiums because would be looking at a higher risk class -LRB- the risk class determines the premiums - the higher the risk class/rating , the higher the premiums are going to be -RRB- . Many people often look at converting all or a portion of the face amount to permanent insurance -LRB- if you 're still within the available conversion period on your policy -RRB- in that scenario because there 's no new medical underwriting and the rates are just recalculated based on your age and the type of program it 's converted to -LRB- universal or whole life -RRB- . Before canceling any life insurance policy , you should always discuss it with your agent to make sure it 's the right course of action for you so you do n't miss something or realize there was a need where you thought there was n't one . You do n't want to look back and say I wish I still had that coverage . 