Can life insurance be cancelled due to a new health condition?

Whether a life insurance policy can be cancelled due to a new health condition depends on several factors, including the type of policy, the terms and conditions of the policy, and the severity of the new health condition. Firstly, it's important to understand the difference between term life insurance and permanent life insurance. Term life insurance provides coverage for a specified period of time, while permanent life insurance (such as whole life or universal life insurance) provides coverage for the insured's entire life. In general, it may be more difficult to cancel a permanent life insurance policy due to a new health condition than it is to cancel a term life insurance policy. The terms and conditions of the policy are also important to consider. Some life insurance policies include a provision that allows the insurance company to cancel the policy if the insured develops a new health condition that significantly increases the risk of death. This provision is known as a "contestability clause," and it typically applies only during the first two years of the policy. After that period, the policy becomes "incontestable," which means that the insurance company cannot cancel the policy due to any health condition that arises after that time. If a new health condition is diagnosed during the contestability period, the insurance company may investigate the claim to determine whether the condition was pre-existing and not disclosed on the insurance application. If it is determined that the condition was not disclosed, the insurance company may cancel the policy and return any premiums that have been paid. If the policy is incontestable, the insurance company cannot cancel the policy due to a new health condition, unless the insured fails to pay the premiums. However, the insurance company may raise the premiums if the insured's health condition increases the risk of death. It's also worth noting that some types of life insurance policies, such as group life insurance policies offered by employers, may be cancelled if the insured leaves their job or if the employer decides to terminate the policy. In these cases, a new health condition would not be the reason for cancellation, but rather a change in employment or policy terms. In summary, whether a life insurance policy can be cancelled due to a new health condition depends on the type of policy, the terms and conditions of the policy, and the severity of the new health condition. If the policy is incontestable, the insurance company cannot cancel the policy due to a new health condition, but they may raise premiums. If the policy is within the contestability period, the insurance company may investigate the claim and potentially cancel the policy if the new health condition was not disclosed on the insurance application.