3+ Reasons, Why You Need to Re-Think Your Old Life Insurance Policy?
There was a time when life insurance was good enough. Policies were purchase and kept in a safe place where years would pass without checking to see if something better was available.
#1 Your Old Life Insurance Doesn’t Pay
In the past, life insurance didn’t pay a dime of the policy’s death benefits if you got sick or injured but all that has changed- for the better.
From the first beginnings of life insurance people have gotten sick with a life insurance policies that do nothing to make their lives better.
Today, a simple policy review could uncover the need to update your life insurance policy and improve the benefits that are available to you.
For example, most people still don’t know that today’s new life insurance policies are able to pay you money from the policy while you are still alive.
This is a great benefit because it makes the death benefit available to you when you are sick, injured or chronically ill.
That’s correct. The death benefit, which is normally paid to your beneficiaries when you die, can actually be paid to you during your lifetime. The choice is yours.
Think about that for just a moment. How much more valuable would your life insurance be if you could use the death benefit yourself?
And the use of the money is not restricted to any illness related expense. For example, you can use the money to pay down or pay off the mortgage on the family home. You can set up education funds for your children or grandchildren. Another thing you might consider is paying for treatments, or other cost such as co-insurance and deductibles that are not covered by health insurance.
Getting life insurance with living benefits is not something you should do on your own.
Working with a financial professional can insure you get the policy you need without making unexperienced mistakes that can end up costing you in the long run.
#2 The Cost of Life Insurance Has Decreased
Life insurance premiums have decreased in cost. People are living longer and this is one reason why the cost of insurance has gone down. Life insurance companies use mortality tables in determining the cost of insurance. Since the life expectancy of the population has gotten longer, with people living longer lives, life insurance companies are able to reduce their insurance rates.
Competition is another reason that life insurance companies reduce their insurance rates. In order to remain competitive in an industry with some 2,000 life insurance carriers, companies must continuously reevaluate their policy pricing.
This competitiveness between life insurance companies can be of great benefit to you. With a lower cost policy you can get more coverage for the same amount of premium. The alternative is to keep the same amount of coverage at a lesser cost.
Either way, you win when life insurance premiums go down, but you need to take action since the policy will not automatically adjust to the new lower premiums.
In order to take advantage of lower premiums, you will need to have a new application go through an underwriting review.
This is best done through a life insurance agent that has access to numerous highly rated insurance carriers.
3# Buying life insurance is not a do-it-yourself thing
As stated before, there are thousands of companies and each has their own qualification standards, called underwriting. For instance, two identical companies can have similar pricing for a particular policy of the same amount. However, the first company has tighter qualification requirements than the second company. After going through the underwriting process, you can end up with a higher rate by opting to go with the first company.
This is where it pays to use an experienced life insurance professional.
#4 Expensive Life Insurance Renewals
You may be shocked to learn that renewing your term life insurance can come at a steep cost.
This is not a problem if you are healthy enough to qualify for a new policy, but it can be a severe penalty if you’re not.
Another possibility is to convert your old term policy to a permanent type of policy. You must meet certain policy requirements to effectuate a term conversion. Normally these have to do with your age and the maximum allowable time allowed for conversion under your life insurance contract.
There may be no good options if you cannot get new life policy or convert your old term policy to a new permanent policy before the expiration period of the policy’s conversion feature.
This is why it is important to review your life insurance coverage at least once every one to three years.
Checking your life insurance policy
The first thing you should do is find your original policy. It will provide you with the name, address and contact information for your current policy. This is a great place to start.
“If you can’t find your policy or don’t know the name of the company, you can try the policy locator service from the Medical Information Bureau.”
Start by contacting the home office of your current insurance policy. Ask them to give you illustrations for the conversion option on your current policy. Request numerous scenarios, including the availability of any special offerings.
Be prepared to know what you are asking for. You may find that a company is not willing to provide advice on what you should do with your own policy. They will only take action on your specific request.
For this reason, you may want to get additional guidance from the agent that sold you the policy.
If that agent is no longer available, you should contact an experienced life insurance professional. That person can help organize a plan to find you the best life insurance solution for your needs.
Policy Reviews are Worth Your Time
A policy review is a way to ensure that your original policy is still the right policy for you.
While people are often prompted to review and make changes to homeowners and auto insurance policies, (perhaps being more aware of the need, due to physically changing homes or autos), the same cannot be said for life insurance policies.
However, not reviewing your policy can end up costing you and your family a great deal of money.
Now that you have 3+ reasons to check your life insurance policy, you have no excuse. Get started today with one of our “Getting Started Suggestions”, found at the end of each section.
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