Cooling off period for insurance – cancellation rights explained

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If you’ve taken out an insurance policy how long do you have to change your mind? What is the cooling off period for insurance and will you have to pay a penalty?

Cooling off period for insurance

You normally have the right to change your mind if you’ve bought a financial product such as an insurance policy. In some cases there will be charges to pay. The length of time you have to change your mind varies from product to product. In this guide, I’ll explain the cooling off period for the different types of insurance.

Cooling off period for insurance

If you take out an insurance policy, you generally have either 14 or 30 days to change your mind. However, in some cases there may be no cooling off period at all. The length of time depends on the policy and how you’ve bought it. Companies can offer a longer cooling off period, but they must be on the same terms as those laid out by the regulations.

  • A 30-day cooling off period: You have 30 days to change your mind about an insurance policy if it’s payment protection insurance (PPI), life insurance, critical illness insurance or income protection. You don’t have a 30-day cooling off period if the policy can be cashed in.

SAVVY TIP: Some life insurance policies can be cashed in for a certain amount. However, many have no value if you stop paying the premiums.

  • A 14-day cooling off period: You have 14 days to change your mind about any other type of insurance, such as home insurance, car insurance, pet insurance etc. There are some exceptions to this if you buy it face-to-face (see below).
  • No cooling off period: You don’t get a cooling off period if you’ve bought a travel insurance policy to cover a single holiday (and the policy has less than a month to run). This doesn’t apply if you buy annual travel insurance. You also don’t get a cooling off period if you buy a PPI, life insurance or income protection policy that has a term of less than six months and if you buy the policy face-to-face from an unauthorised person (I’m trying to clarify with the financial regulator exactly who they mean by this).

When does the cooling off period begin?

The cooling off period begins either the day you sign the contract or the day you receive the terms and conditions, including your right to cancel, if that’s later. In the case of life insurance, income protection and critical illness insurance, it’s the day you’re told that the contract has started.

What you’ll be charged

If you cancel a policy within the cooling off period, it doesn’t mean you won’t be charged. The amount you’ll be charged depends on the type of product you’re trying to cancel and what, if any, work has already been done.

  • You can be charged for ‘services provided’ but only if the charges are fair. The charges must be in line with what you would have been charged for the whole contract.
  • The charges can’t in any way be a penalty.

SAVVY TIP: Even if these conditions are met, a firm cannot charge you unless it told you that you’d have to pay a charge if you cancel the policy within the cooling off period. You also can’t be charged if the company started the policy before the cooling off period ended, without your permission.

  • There’s no charge if you cancel a life insurance, income protection or critical illness insurance policy.
  • There’s no charge if you cancel a payment protection policy (PPI) unless you’ve made a claim.

How to cancel your insurance policy in the cooling off period

You have to write or email to say you’d like to cancel your policy. You can’t just do it over the phone. The deadline applies to when you sent the letter or email, not when it arrives.

SAVVY TIP: You should receive a refund of any premiums paid promptly, but definitely within 30 days.

Related articles:

Ten tips on getting the right travel insurance policy for less

Not happy with your financial provider? Complain to the Financial Ombudsman Service it’s free

Using price comparison sites for home insurance

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