Do you have a policy that is too expensive or with increasing premiums? We can help!
Research all your options with the article references and info below. You may have options you weren’t aware of, so be sure to read carefully.
Purchasing a new policy may be the best answer, but not always.
Top Reasons to Replace an Existing Life Insurance Policy
There are several reasons why you may be considering replacing an existing life insurance policy. The most common reasons include the following:
Level Term Period is Expiring
Many people purchase a term policy for its affordability, and then when the level premium period comes to an end, they still need coverage. Unfortunately, the renewal rates are not usually palatable. This is a great reason to replace your policy.
Company Ratings Downgrade
Perhaps you’re no longer comfortable with the financial stability of your current carrier. Perhaps they were downgraded. If so, we have the information you need to compare policies from the nation’s top providers.
Needs Have Changed
Let’s say you bought a term policy thinking you only needed 20 year term, and later you decide you need 30, or vice versa.
Health Has Improved
You might save more money purchasing a new policy if your health has improved than filing for a rate class reconsideration.
IF you do decide to replace your current policy, you need to know a few important facts:
The two main reasons you might not want to change policies are surrender charges (only in permanent plans such as whole life or universal life), and your new policy will likely contain a new two year contestable period, which means the company could potentially weasel out of paying the life insurance proceeds upon your death if you die within 2 years of purchasing the policy and they find that you answered questions fraudulently on your application. (If you answer all your questions on your application honestly, you have nothing to worry about.)
There are many ways to replace your policy if this is what you decide.
Most importantly, it is highly advised that you continue to pay the premiums on your current policy while your new application for life insurance is in the underwriting process. If replacing, you can stop paying the premiums once your new policy is in force.
For more information on replacing an existing life insurance policy, please see our article titled “I can’t afford my life insurance premiums. Now what?”
3 Tips to Save Money on Your Existing Policy
If you decide that keeping your existing policy is a better option, you can still save money by following one or more of these tips on an existing policy.
#1. Reduce your death benefit
One way to save on premiums is by reducing your death benefit. Most companies will allow a one-time reduction of face value.
#2. Decrease your term length
You may also be able to save by decreasing your term length. In addition to allowing a reduction in death benefit, most companies will allow a reduction of term length as well.
#3. Improve Your Health
If you’ve gotten healthier since your policy was issued or stopped smoking, you should first apply for a reconsideration of health classification, which will potentially lower your premiums if approved at a better rate class. For example, if you were originally rated at Standard for taking prescription medication, which you no longer take or need, you might now be a “preferred” candidate. If approved, your premiums will be reduced.*While we make every effort to keep our site updated, please be aware that "timely" information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.