Consequences of Not Notifying your Life Insurance Company of an Address Change

Life Insurance

Imagine you bought a 10 year level renewable term life insurance policy and paid premiums through a monthly bank draft agreement of $32. You now find that your premiums increased to $300 per month at the end of the 10th year without your knowledge. What would your reaction be when you checked your bank statement and found that the $300 draft occurred for 1 month, 2 months, 3 months or more until you recognized the increased premium? Would you be upset and call your insurance company or agent to complain? The description above is a reality that I find occurs as a consequence of not notifying your life insurance company of an address change.

Life insurance polices on monthly bank draft billing do not generally generate premium notices. As long as the premiums are successfully drafted from the checking account, coverage is maintained without interruption. It is possible that the only correspondence the life insurance carrier would send is a letter notifying the policy owner of an increase in premium at the end of the initial term period which could be the 10th, 15th 20th or 30th year. This would occur if the term policy were guaranteed renewable term as opposed to non-renewable term insurance. Many term policies issued are guaranteed renewable, meaning they continue at the end of the initial term to a yearly renewable term until ages up to age 95, in some instances. Guaranteed renewable term means the insured does not have to re-qualify medically to renew the term. Often times the renewal premium is substantially higher than the initial level premium and the renewal premium may increase each year.

Policy owners enrolling in monthly bank draft agreements need to notify their insurance carrier of address changes. This insures the term renewal letter and any correspondence relating to the policy are sent to the right place when there is a premium change at the end of the initial term. The policy owner can then decide whether to renew the policy at the increased premium, replace the policy with either a new term policy or an alternative type of policy or notify the insurance carrier to cancel the monthly bank draft agreement before the renewal occurs.

People may change their address but usually maintain the same checking account, which would not impact the monthly bank draft agreement. The insurance carrier would send correspondence to the policy owners’ address on file, which may not be forwarded to the new address, resulting in the correspondence being returned as undeliverable.

Before complaining to your life insurance carrier or agent, consider the consequence of not notifying your life insurance company of an address change.

About the author:  Ken Buccico holds a LUTC designation and has been in the life insurance business for 39 years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best life insurance option, contact Ken at 1-800-651-1953 or