Canceling a life insurance policy should only be done, if you can get a new policy that either costs less or better meets your needs and goals. The benefit of purchasing a new policy is that you can often get better rates, even if you are considerably older than when your original policy was purchased, as term rates are very competitive. However, you should never cancel your old policy before assuring that your new policy is in place. If your health status has changed since your original policy, you could be denied coverage or receive coverage at a much higher cost than under your original life insurance plan.
In order to help you decide whether or not to purchase a new life insurance policy, insurance agents are required by regulators to provide documentation that the replacement policy is advantageous compared to your previous policy. The comparison is done via a detailed form which equates cash values and other key features. Be sure that you receive this form and review it in detail with your life insurance agent before purchasing a new policy.
If you currently have a cash value policy, it is unlikely that a new policy will be advantageous. Cash value policies usually build in value slowly, and if a new policy is issued, you will have to start rebuilding that value, which is usually not financially advisable.