Does It Make Sense To Ever Replace Existing Term Life Insurance Coverage? By Dennis Jarvis At Isnare.com Ezine Articles

Does it ever make sense to replace existing life insurance coverage? Maybe. It depends on a host of factors but the key determining one is cost. Let's take a look at whether replacing term life coverage might be the right move for you.

Many people have existing term life policies in effect and they come to our site to price check the market. This is a pretty smart move for a variety or reasons. First of all, for a given person's information (age, gender, health, etc), some carriers and/or term life plans can be more competitive. This can change with time or perhaps a person did not have access to dozens of carriers and hundreds of plans like we provide instantly through our term life quoting engine. If a person had a limited (or even one) carrier to choose from, there could be significant savings out there on the market.

The time a person has been on the current coverage can work both ways. On one hand, term life rates have dropped significantly over the past decade. It really has become a commodity in a very competitive market. On the other hand, your age has increased and age is a critical driver for term life rates. Keep in mind that the resulting difference in rates between age 30-35 is probably much less of an issue than between say 50 and 55. The only way to find out is to run your quote. Let's look a little closer.

The simplest approach is just take your current term life coverage parameters (say $500K for 20 years) and run the quote. You want to make sure to match the health class in order to compare apples and apples. This bring up an important point. What if your health class has changed...either for the better or worse. If health has changed for the worse, it might be tough to get better term life insurance rates. If it has improved, you can either apply to replace coverage or request a health re-evaluation from your current coverage.

Another concern is whether it makes sense to exactly duplicate existing coverage. If your original life insurance term was to cover your family till your children get through college and you are 10 years into a 20 year term, maybe it makes sense to run a quote for the 10 years left. Either way, you can quickly change the quote parameters and compare the results.

Finally, a very important point. Never cancel coverage until you have received written confirmation of approval and satisfactory rates/terms from the carrier. This is critical. The carrier and the underwriter ultimately has final say on the rates offered and eligibility itself. Unknown health issues may arise from the paramedical that make it impossible to qualify for coverage. It's important to discuss the offered plan from the carrier with your current coverage with a license, professional agent to make sure you are making the right decision either way.

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