How to Replace Current Term Life Insurance
Replacing your term life insurance policy has many considerations, primarily because your age--and possibly your health status--have changed since you last applied for your life insurance policy. Your original policy can be used to help you compare your new life insurance options.
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Things You'll Need
- Original policy Comparison quotes from life insurance agent or from online research Application information
Instructions
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Locate your original life insurance policy. Note the amount of the death benefit, when you purchased the insurance (the policy date), the premium amount and how long the premium remains level.
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2
Research the types of life insurance policies available. You can consult with your insurance agent or conduct your own research online. Whether you are considering a new term life insurance policy or another type of life insurance, understanding how each works is paramount.
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Conduct a need analysis to determine if your life insurance requirements have increased or decreased. This can be done with an agent or online.
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Compare the rates from many different life insurance companies. Again, this can be done online or through the services of an independent life insurance agent who is affiliated with many different life insurance carriers. Make sure you are comparing like products, and find out how each of the companies you are considering is rated. Third-party ratings from companies such as Standard & Poor's and Moody's give you more insight on the financial strength of each insurance company.
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Complete the appropriate paperwork to cancel your current policy. A replacement transaction falls under special consideration in each state, and the form will be reviewed by your state's insurance commissioner's office to ensure that the new purchase is in your best interest.
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Complete an application once you have decided what type of insurance and which company to use. This can be done either online or on paper. You must disclose personal, health and financial information so the insurance company can determine what risk classification you fall under and how much your premium will be. Remember, you can be denied life insurance; the most common reason is poor health.
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Complete a paramedical exam or doctor's visit and provide the required bodily fluids, such as saliva, urine and blood.
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Make your first premium payment promptly to avoid any lapse in coverage.
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Tips & Warnings
Remember that the older you are, the more your premium will be. Also, your health may have changed since you purchased your current term life insurance policy. These two factors greatly impact how much a new policy may cost and whether you can qualify for a new policy.
Never lie on a life insurance application. A new policy comes with a two-year contestability period, meaning that if you die within 24 months of purchasing a new policy, the insurance company has the right to investigate whether the application contained any misrepresentations. If any are found, the company can deny the death claim by your beneficiaries. Every new policy also comes with a two-year suicide clause, allowing the insurance company to deny the death claim if the insured commits suicide within 24 months of purchasing the policy.
