What to Consider When Replacing a Policy?
If you have an outdated policy, and can find a better value, you may want to consider replacing it. Some general guidelines:
Consider replacement when…
- Your family needs change, requiring more coverage.
- The policy is outdated. Many new policies are cheaper then those offered several years ago, even though you are older.
- Your investment needs can be better met with other vehicles offering a greater rate of return.
- You have several separate policies, and you could combine then into one comprehensive policy with a lower premium.
Be cautious about replacement when…
- You are in bad health, uninsurable, or considerably older.
- You have a good, competitive policy and can’t get a better value for your money.
- You’ve held the policy for a long time, and you may lose valuable benefits.
Other considerations…
- If you are among the very wealthy, your financial purchases could have estate tax consequences. In this case, be careful when making any life insurance purchase or replacement decisions.
- Never cancel you existing policy until the new one has been issued and delivered to you.
- Most policies have a two-year contestability period. Some companies waive this when the policy is replaced and the existing coverage is incontestable.
The Bottom line…
When considering policy replacement, examine your options carefully! Most companies offer proposals that show the cost and provisions of the policy. Ask for these illustrations as you shop for the best value. Your goal is financial security- avoid spending more then necessary. Always consider what works best for you and your family- it’s your decision!
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