It may no longer be Life Insurance Awareness Month, but that does not mean you should sit back and neglect your life insurance needs. It is important that your life insurance policy is kept up to date with your life (needs). But, for the sake of argument, lets say you left your term life insurance policy alone and are now it is nearing the end of your “term”. Or perhaps you feel there is need to replace your old policy. What are your options?
There are several reasons why it may make sense to replace your old term policy with a new one. Lower premiums, duration length, or increasing coverage are just a few reasons that would justify a replacement (or modification) to your current policy.When your life insurance policy comes to the end of its term, one of the first things you will want to do when looking to continue with a term insurance policy, is to determine how you can qualify for a new policy in order to keep the term premiums low. Discuss your options with your life insurance agent to help get you the best premium rates possible.
If your policy has not reached the end of its duration, you still may be able to replace your policy for one with a lower premium. Most agents suggest reviewing your term policy every five years to see if your policy is still competitively priced and fits your life needs. Make sure you compare all facets of your policy: remaining duration, coverage, face value, and any other additional coverage you may have (such as Accidental Death Benefits). You may find that you are eligible for better rates than what you were currently paying.
Another reason to check for a policy with a lower premium would be a positive change in the status of your health. As we have discussed in previous entries, life insurance companies may increase your premiums for various health factors including smoking, weight or alcohol consumption. Should any of those factors change (in your favor) during your term, it is in your best interest to attempt to secure a better rate.
Perhaps you are not happy with the length of term duration you have for your current policy. Many times people will purchase a policy with too short a term, say 10 years. Whether you purchased to keep premiums low or didnt think you needed more than 10 years, you will need to purchase a new policy to replace the short term policy that you originally purchased.
On the opposite end of the spectrum, there are instances where it may be necessary to reduce the duration of a term. Most commonly, this is when the policy holder finds themselves in a financial bind. Most times your current company wont allow you to reduce the duration without you proving your insurability once again, so looking to see if you can find a better premium before you go back to your company is often a smart idea.
Last, but not least, perhaps you realize there is a need for increased coverage. To do this you will have to apply for a new policy. While it is possible to simply get a second policy, it may be less expensive for you to combine the total coverage into a single policy. Once again the best way to determine whether to simply take out a second policy or combine the two coverage amounts is to talk to a life insurance agent.
No matter the reason for your need to replace an old policy, it is best to compare your options before making a purchase. Using an independent life insurance agency, like SelectQuote, will help you determine which companies will offer you the best premiums, regardless of your reasons for purchasing.