Replacing Existing Life Insurance? Consider These 3 Things First

Life Insurance

If you have an existing term life insurance policy and the term period is going to end, you’ll need to purchase another life insurance policy. The last thing you want is to have the term end and not have another policy in place. If the term ends, you can continue the policy but the rates are very expensive - refer to your policy schedule page to see the increase in premium after the term ends - ouch! Consider these things before your term policy expires:

1. What type of policy do you want to purchase? Universal life insurance, whole life insurance, another term policy? There are many different products that you can choose from.

2. What is your current age and how is your health history? If you are going to purchase a new policy, the rates will be based on your current age and health, and will not necessarily end up being the same rate class as your existing policy.

3. Apply early! If you know your policy is going to end on December 31st, do not wait until December 1st to apply for a new life insurance policy.

I have an application that I am currently working on where the client applied for life insurance one month before the term was due to end. Due to the face amount the client was purchasing (in this case 3 million dollars), the insurance carrier requested medical records. The client’s medical records are from the biggest HMO on the West Coast and they are known for lengthy delays in obtaining records.

While waiting for the medical records, the client’s term ended on his existing policy and he is now paying over $600 more per month for his premium, so he does not lose his existing coverage. The medical records were received 6 weeks after they were first requested. The insurance carrier informed me the records were over a thousand pages (for a 5-year period) and will take some time to review. We are hoping to have a decision from the insurance carrier before the client has to pay another month of premium on his current policy. If the client had applied for a new life insurance policy several months in advance of his term ending, he would have had a new policy in place without the worry of paying the increased premium on the existing coverage.

About the author: Teri Costen has been in the life insurance business for over 20 years. She is a mother of three who enjoys working out, taking aerobic kickboxing classes, and making stained glass. Teri believes that finding the right life insurance policy helps protect your family and loved ones. You can contact Teri at 1-800-651-1953 or TCosten@Pivot.com.