Changing Life Insurance Policies? Consider These Five Things Before You Do.

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For some, life insurance might be the last thing they think of before they go to bed at night or the first thing that comes to mind in the morning. Yet, in these strange and uncertain times, buying life insurance, or any form thereof for that matter has almost become a non-negotiable for many people.

One would think that the recent global health crisis would have sparked more individuals to buy some form of life insurance. Yet, a Forbes Advisor survey found that women (22%) are twice as likely to lack life insurance compared to their male counterparts (11%).

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The importance of life insurance and what it covers can be discussed at great lengths, but for the most part, these products and services have become an essential consideration for individuals who want to ensure and protect their families' financial well-being once they have passed away.

Recent findings indicate that after the passing of a primary breadwinner, around 44% of American households would feel the financial burden within six months. More concerning is the fact that around 10% of people would feel the financial strain within the first week.

For some individuals, sticking with the same insurance provider their entire life is a common occurrence. Not only have these individuals built a solid relationship with their providers, but they have become acquainted with the type of coverage they receive, the price they pay, and what their families will receive once they pass away.

While there are countless life insurance products available on the marketplace, it’s almost impossible to choose a product that suits your needs and meets your personal requirements. It might seem strange to change providers, but the process is often easier than you’d expect, although there are some crucial things you need to consider before making this decision.

Underlying Procedures

While it’s possible to change your policy, or cancel one and open a new policy at a different provider, it’s important to know that you will need to undergo several procedures before your new policy is reinstated.

For starters, you might need to retake a medical examination, as some providers require that their customers complete a thorough medical check-up before accepting their policy. This would bring on additional costs, which you usually have to pay for out of pocket, and can take up to several weeks to complete and finalize.

Then there is the time between application and finalization which may take a few days or weeks to complete. It’s not to say that something will happen to you during this period, but it is a potential risk you might want to consider as well.

Remember, you’re not moving from one provider to another with the same documentation and information, you’re taking out a completely new product, and might need to adhere to a different set of rules and regulations to be accepted.

Comparison Shop

Before simply canceling a policy because you feel that you’re paying too much, or not getting enough value for money; shop around first to see what is out there.

As already said, there are hundreds, if not thousands of different life insurance products currently out there, and each suits a specific individual, their lifestyle, and their family dynamic.

When shopping around for different types of life insurance policies, you will get a better idea of which providers can offer you the best range of services at a price point that fits in with your budget. Never simply cancel a policy, thinking that you will get the same type of deal at another provider, not everyone is the same, and you will need to dig around first to find something that’s more tailor-made for you.

Change In Premium Cost

There is a slight chance that you might end up paying more or less for your new insurance policy. And while many hope for the latter, it’s important to be aware that premiums start becoming more expensive as you get older.

That said, it would mean that the same type of policy you took out in your late 20s, might be more expensive now in your early 40s, even if it’s exactly the same type of insurance product.

As you get older, you become a higher risk and liability for insurers, which could increase your life insurance premiums. There are those instances where the dollar change is marginal, often by $5 or $10, but in the long run, this makes a big difference to your monthly budget.

Different Product Offerings

Changing policies because you might be unhappy with one or two minor things can end up costing you more than what you have bargained for.

Let’s say you notice that your current insurance policy does not protect your existing assets, but you have found a different policy at another provider that offers this type of service. Before you switch, see whether the new policy and provider can still cover your existing benefits.

Some providers won’t necessarily pay out if you already have pre-existing medical conditions or chronic diseases. You may want to check if life insurance covers suicide, or whether it’s possible to add more beneficiaries to your current policy.

 

If you consider changing policies due to a lack of product variation and offerings, then it’s possible for you to either supplement your current policy with another product or convert the current one.

If you reach a point where you notice that you’re paying more and more, but not getting enough coverage out of your policy, take some time to review your current policy with your agent or provider and ask as many questions when you feel unsure about something.

Not All Agents Are Licensed

Yes, even in our day and age of digital security and cyber software that can detect the slightest virtual threat; there are still agents and brokers that are not licensed by their state regulator. While these faux agents are far and wide in between, there have been instances where people buy insurance products from unregistered or unlicensed agents without prior knowledge.

Even if you find a product that might be more affordable than your current policy, always double-check, even triple-check to see whether your agent is licensed with the local authorities. Don’t feel threatened or intimidated by faux agents, as these sorts of unregistered or undocumented activities can become a costly endeavor for you and your family.

Final Thoughts

Taking out life insurance is a smart move, for any person, regardless of age, demographic or financial status. These products can help to financially protect your family or loved ones in the event of sudden death or illness.

Before changing policies, canceling a policy, and switching to a new company, you must consider a couple of things beforehand. This way you will be sure to get the right product that suits your personal needs, but also you will get a policy that fits your budget and can help give you more peace of mind in the long run.