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https://viatical.org/blog/things-you-should-know-before-canceling-your-life-insurance-policy/

If you are canceling a life insurance policy with a cash value, it is likely that you know what that value is. You pay into your life insurance policy over the years and there are a cash value element and a cash surrender value element on some policies. In essence that’s the amount of money, the insurance company is willing to pay you for your life insurance policy.

If you have a term life insurance policy you know how much cash you’re getting back from the policy when you decide you no longer need it. And the amount you’ll get with a term life policy is zero. Nothing. A life settlement by definition will give you more cash for your term life insurance policy.

If your health has slipped at all since you first purchased

Your life insurance, you may have a hidden value, meaning there may be a company that will pay you more for your life insurance policy then your own life insurance company. Some life insurance companies do not allow their agents to even mention the option, and it’s up to you to do your own homework.

The first question that is usually asked is, ‘If I cancel my life insurance do I get cash back?’ The answer is always the same…. Well, it depends. It depends on the type of insurance policy you have, and it also depends on your health status.

It is not uncommon for someone who has had a slippage in health to get back a lump sum of money that equates to as much as they have paid for their insurance policy, or even more, regardless of whether they have a cash value or not. No one should begin the process of canceling your life insurance policy without first having it appraised to see if it has a hidden value that you do not know about.

Even convertible term life insurance policies and Universal Life policies with no cash value may have a hidden value if your health has declined. It’s estimated that $112 billion of life insurance policies lapse each year.

If you are thinking of canceling your life insurance policy

Please know that canceling life insurance with cash value or term insurance or life insurance without cash value can all have a hidden value if your health has slipped. Please have your life insurance policy independently appraised before lapsing it or surrendering it back to the company.