Cancelable Insurance

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DEFINITION of 'Cancelable Insurance'

This is insurance that may be canceled, at any time, by the insured party or by the insurance company. Aside from life insurance, most insurance policies can easily be. If the insurer cancels the policy, it must first give notice and must also refund prepaid premium on a pro rata basis.

BREAKING DOWN 'Cancelable Insurance'

Before canceling an insurance policy, the insured party must make sure that he or she has replacement insurance coverage that is already confirmed. If there is no replacement coverage, the insured party can go completely uncovered for a period of time. One good reason for making certain of replacement coverage is that the insured party could face a situation in which certain medical conditions that developed during the prior health insurance coverage are excluded from coverage under the new insurance as "preexisting conditions." This is why it is essential to thoroughly research a new policy before the old one is canceled.

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RELATED FAQS
  1. What happens if my insurance claim falls below the deductible level?

    Though the ins and outs of health insurance are often confusing, the concept of the insurance deductible is relatively straightforward. ... Read Full Answer >>
  2. How is the deductible I paid for my insurance claim treated for tax purposes?

    The deductible you pay on your health insurance policy may be tax-deductible if you meet certain conditions. However, whether ... Read Full Answer >>
  3. What level of reserve ratios is typical for an insurance company to protect against ...

    In the United States, and most developed nations, regulators impose required statutory capital reserve ratios on insurance ... Read Full Answer >>
  4. What risks do I face when investing in the insurance sector?

    Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>
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