Cancellation "Letter" Required

[cladams]

Does an insured necessarily have to send a "signed letter of cancellation" to cancel if the company requests it upon cancelling the draft?

If the draft is cancelled, and the insured does not send in any more premium, the policy will cancel for non-payment. What are the ramifications of not sending their "required letter of cancellation?"

 

[WinoBlues]

Does an insured necessarily have to send a "signed letter of cancellation" to cancel if the company requests it upon cancelling the draft?

If the draft is cancelled, and the insured does not send in any more premium, the policy will cancel for non-payment. What are the ramifications of not sending their "required letter of cancellation?"

If there is any cash values left in the policy and it has APL it will be used to pay premiums till it is gone. The insured loses the cash values.

 

[cladams]

Thanks Wino!

So if there is no cash value, or APL in the policy, the insured can simply cancel the bank draft and forgo payment?

 

[VolAgent]

Thanks Wino!

So if there is no cash value, or APL in the policy, the insured can simply cancel the bank draft and forgo payment?

Yes, then the policy would simply lapse out for non-payment. One advantage of that versus a cancellation, a lapsed policy can be reinstated. Assuming the company allows reinstatements and the insured can medically qualify to reinstate the policy.

 

[rousemark]

Thanks Wino!

So if there is no cash value, or APL in the policy, the insured can simply cancel the bank draft and forgo payment?

Some companies will not "cancel" a bank draft without written notice. If that be the case, it is best to simply comply with their requirements and be done with rather rather try to argue with them about it. Because, if that is their policy, in the end you will have to do it anyway unless the client was to a pay a fee to stop the draft at the bank.

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Yes, then the policy would simply lapse out for non-payment. One advantage of that versus a cancellation, a lapsed policy can be reinstated. Assuming the company allows reinstatements and the insured can medically qualify to reinstate the policy.

Also, doing it that way, the insured has the use of the grace period if anything happens. Over the years I have had a couple of claims that paid because the policy was still in force during the grace period. I ti is my opion, it should always be done this way unless the policy has cash value and you are going to exercise a nonforfeiture benefit.

 

[StanTheInsMan]

In the case of a term policy the only thing a client loses is unused premium returned which is minimal. If it is a whle life you must send in a cancellation letter to get a return of cash value

 

[jdeasy]

Some companies will not "cancel" a bank draft without written notice. If that be the case, it is best to simply comply with their requirements and be done with rather rather try to argue with them about it. Because, if that is their policy, in the end you will have to do it anyway unless the client was to a pay a fee to stop the draft at the bank.

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Also, doing it that way, the insured has the use of the grace period if anything happens. Over the years I have had a couple of claims that paid because the policy was still in force during the grace period. I ti is my opion, it should always be done this way unless the policy has cash value and you are going to exercise a nonforfeiture benefit.

What FE company will not stop a bank draft without a written request?

 

[VolAgent]

What FE company will not stop a bank draft without a written request?

I'm unaware of any company that will not take a verbal request from the owner to change payment method from monthly draft to direct bill (quarterly, semi, annual, whatever).

 

[jdeasy]

I'm unaware of any company that will not take a verbal request from the owner to change payment method from monthly draft to direct bill (quarterly, semi, annual, whatever).

I'm not aware of any either. That's why I asked the question. he said some won't stop the draft without having it in writing. I would like to know who that is.

 

[VolAgent]

I'm not aware of any either. That's why I asked the question. he said some won't stop the draft without having it in writing. I would like to know who that is.

I suspect the request was not properly worded.

The company heard, "Cancel the policy." Which would require a written request.