Switching Life Insurance: What Are the Necessary Steps?

If your life insurance policy does not work for you anymore, switching it may be a good idea. There are plenty of options so finding a policy that matches your needs should not be a problem. Keep reading to learn about the best reasons for switching life insurance and the necessary steps.

Why Should You Switch Life Insurance Policies

There are a few reasons why you may need to switch your life insurance policy. They include:

  • When you believe that you can get better coverage or lower premium rates with a different provider
  • You cannot afford the premium payments anymore
  • Your needs and situation have changed: you have been through a divorce, your kids have grown up, or you no longer need much coverage
  • You do not want to continue working with your insurance provider following an unpleasant experience
  • When you still need a level of coverage but have reached the end of your term policy
  • You wish to change from a term policy to whole-life insurance

Whatever your reason, switching your policy is important if the current one no longer meets your needs.

Switching Your Life Insurance

Find the Type of Policy You Need

The first and most important step is to decide whether you need whole or term life insurance. Term life insurance is a type of life insurance that only lasts a specified period. You may need a medical exam before getting it. Term life insurance policies may get more expensive as you get older. Annuities and cash value policies are a bit more expensive to replace as they have surrender charges.

Find Out the Upfront Fees

In most cases, you will need to pay most of your life insurance policy fees upfront. Ensure that the amount you will be saving on your new policy is worth the upfront cost. When reviewing your life insurance, note that the premium payments on your new policy can change and you may not be insurable under certain conditions. Take note of the tax consequences of switching your insurance policies.

Determine the Amount of Coverage You Need

Determine the amount of coverage you need and think about the amount of money you wish to spend. Think about how much money you would need to replace your household income. Your decision should ensure that your beneficiaries are well taken care of when you are gone. There are instances when adjusting your policy may be enough. When you are sure of the changes you wish to make, speak with your insurer, and they may be able to adjust your policy. If there is no option to adjust your policy, you can go on and switch it.

Ensure that Your Policy Is Active

Always buy your new policy and make sure that it is active before canceling your old one. You should not have a gap in your coverage. You may need to wait some time before the new policy pays out on certain claims. Generally, there is a two-year contestability period. During that time, your insurance provider can deny or contest your claims.

Speak With Your Insurance Provider

Talk to your current insurance provider and let them know that you plan on switching your life insurance policy. If you are still on the fence, they may help you make up your mind.

Change Your Policy

The process of changing your policy is not as simple as it may seem. You cannot simply transfer your policy to a different insurance provider. You will be required to answer a series of questions before completing the process. The questions are meant to protect you from scammers and fraud. Your insurance provider will need the following information:

  • The expiration date of your current policy
  • The policy number of your current life insurance policy
  • Your current insurance provider

Fortunately, there are plenty of life insurance providers and it is easy to find the perfect one for your needs. The trick is to do your research and find the most appropriate option.

Life insurance is a necessity rather than a luxury for many people. If you are the main breadwinner for your family, you need insurance to ensure that your dependents will be well cared for when you are no longer alive. If your current insurance cover is no longer working for you, consider switching it. Having the best cover at the best price is a good idea. If you are not sure that changing your life insurance policy is a good idea, your insurance provider may help you adjust your current policy.

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