Key Person Insurance logoKey Person InsuranceCompare providers
  1. Home
  2. Guides
  3. How to cancel key person insurance

How to cancel key person insurance, and what you get back

How to cancel key person insurance is set out in the insurer's own policy documents.

Legal & General's says you can cancel at any time, refunds premiums if you cancel within 30 days, and gives nothing back on monthly premiums after that (Legal & General ↗).

This guide covers what the documents say, and what to weigh before you cancel.

Every claim here is our summary of a named external source, linked beside it. Sources change: check the wording at the link before you rely on it.

How to cancel ↓Alternatives →
01 · Key facts

How to cancel key person insurance: the key facts

The policies in this guide are term cover, and Aviva's says it has no cash-in value at any time (Aviva ↗), so cancelling releases no money.

Each card is from an insurer's policy document; your own policy's documents are the authority for it.

02 · Reasons

Reasons to cancel key person insurance

The most common trigger is the key person leaving.

Legal & General's technical guide says that if a key person leaves or retires before the end of the term, the business can stop paying and let the policy lapse, keep paying to the end of the term and receive a capital sum on a claim, or assign the policy to the key person, who becomes its legal owner (Legal & General ↗).

Royal London says the company may cancel the plan as it is no longer needed, or gift it to the key person.

It warns the assignment could be treated as a benefit in kind and may give rise to capital gains tax on a claim, and recommends professional tax advice (Royal London ↗).

There is a tax angle too.

For the premiums to be deductible, HMRC says the term should not extend beyond the employee's usefulness to the company (HMRC ↗).

Stop paying

Let it lapse

Pay to the end

Keep it

To the key person

Assign it

What happens
The policy lapses (Legal & General ↗)
On a claim, the business receives a capital sum (Legal & General ↗)
The key person becomes the legal owner and can keep paying (Legal & General ↗)
Money back
None on monthly premiums after 30 days (Legal & General ↗)
Not applicable
Not applicable
Tax
—
Deduction depends on the term matching the person's usefulness (HMRC ↗)
Could be a benefit in kind; possible capital gains tax on a claim (Royal London ↗)
Swipe to compare

The three routes are Legal & General's; the tax notes are Royal London's and HMRC's. Take tax advice on your case.

03 · Step by step

How to cancel: step by step

The documents describe a short process.

Legal & General's policy summary says: to cancel or claim, get in touch using the contact details in the policy summary (Legal & General ↗).

What you get back depends on when you cancel and how you pay (Legal & General ↗).

We found no published notice period or form for business policies, so we do not describe one.

Ask the insurer, or the adviser who arranged the policy, what it needs from the company.

01

Contact

Get in touch with the insurer

Using the contact details in the policy summary. The company owns the policy, so the company cancels it.

02

Timing

Check if you are within 30 days

Legal & General and Aviva refund premiums paid if you cancel within 30 days.

03

Refund

Check how you pay

Later on, Legal & General gives no money back on monthly premiums, and a proportionate refund on annual ones.

04

Cover

The cover ends

Nothing is paid for anything after that, and there is no cash value to collect.

The company is the plan owner (Royal London ↗). Steps from Legal & General (Legal & General ↗) and Aviva (Aviva ↗). Your insurer's documents may differ.

04 · Before you cancel

Before you cancel: consider these points

After the first 30 days, cancelling ends the cover and Aviva gives no money back (Aviva ↗).

If you want cover again later, it will be a new policy, and MoneyHelper says premiums depend on age, health, lifestyle and job among other things (MoneyHelper ↗).

Stopping the premiums is not a clean cancellation either.

Legal & General says cover ends 60 days after the first missed premium (Legal & General ↗); Aviva says its policy won't pay out if it has ended because premiums were not paid (Aviva ↗).

Key person risk →Do I need key person insurance? →
  • Is the loss still there?

    Cover exists for a loss of profits the business can show in the person's absence (Legal & General ↗).

  • Is there a loan?

    If the cover was sized to a business loan (Legal & General ↗), check the loan terms first.

  • Could you cover them again?

    A new policy is priced on the person's age and health at the time (MoneyHelper ↗).

  • Is a smaller change enough?

    Aviva lets you decrease the amount of cover, or remove optional benefits, once the policy has run six months (Aviva ↗).

05 · Alternatives

Alternatives to full cancellation

Aviva's policy summary says you can remove the optional benefits, and increase or decrease the amount of cover, once the policy has been in place for at least six months.

It may change or replace the policy, or issue a new one, and may ask for medical information (Aviva ↗).

Legal & General says other changes can be requested, but a new policy may need to be set up (Legal & General ↗).

And if the key person is leaving, the policy can be assigned to them (Legal & General ↗).

Key person insurance renewal →Compare cover options →Cover calculator →

What the documents allow

Less cover
Decrease the amount of cover after six months (Aviva) (Aviva ↗)
Fewer extras
Remove the optional benefits after six months (Aviva) (Aviva ↗)
Other changes
May need a new policy (Legal & General) (Legal & General ↗)
Key person leaving
Assign the policy to them (Legal & General) (Legal & General ↗)
Swipe to compare
06 · Sources

Check it for yourself

Every claim on this page is our summary of one of the documents listed here.

We last checked them against the live sources on 28 September 2026.

The documents are the authority, not this page.

Insurers and HMRC update them, so validate any figure or condition at its link before you rely on it.

Questions

Cancelling key person insurance, answered

Legal & General’s policy summary says you can cancel the policy at any time.

To cancel, it says to get in touch using the contact details in the policy summary.

Check your own insurer’s documents: they set the terms for your policy. Legal & General policy summary ↗

Only in some cases.

Legal & General refunds any premiums paid if you cancel within 30 days; after that you get no money back if you pay monthly, and a proportionate refund of the annual premium if you pay annually.

Aviva also refunds any premiums paid if you cancel within 30 days, counted from the later of receiving the policy schedule or Aviva confirming the start date, and gives no money back after that.

Neither policy has a cash value. Legal & General policy summary ↗

It ends.

Legal & General says you are covered until the expiry date, and the policy ends before then if it is cancelled.

No claim can be paid after that, and Aviva says its policy has no cash-in value at any time. Legal & General policy summary ↗

That is your decision, and the insurers describe three routes.

Legal & General says the business can stop paying and let the policy lapse, keep paying to the end of the term and receive a capital sum on a claim, or assign the policy to the key person, who becomes the owner.

Royal London says an assignment could be a benefit in kind and may give rise to capital gains tax on a claim, and recommends professional tax advice. Legal & General guide ↗

Beta · information only

Cancelling because the amount is wrong? Recalculate it first.

The calculator works through the earnings, profit and loan methods UK insurers publish, so you can see what cover the business needs now.

01Earnings, profit and loan methods

02Insurers’ published multiples, with sources

03No email, no quote, no sales call

Information, not advice

We are not an insurer, broker or regulated adviser, and we do not give quotes or recommend a policy. For regulated advice, use an adviser authorised by the FCA.

Open the calculator →

Takes you to the key person insurance calculator.

Not financial advice. This page is general information. Before buying insurance, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗). For free guidance, see MoneyHelper.