How to Decrease a Term Insurance Policy
Term life insurance is temporary life insurance. Policy terms range from one year to 30 years. When purchasing your life insurance policy, it's important to know how much total death benefit you'll need. But even if you do a good job calculating your insurance needs, those needs may change over time. If you find that you no longer need as much death benefit as you originally thought, you have the option of reducing the death benefit on your term policy.
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Instructions
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Get a new life insurance application with a conversion form from your insurance company. If you suspect that you can get a lower rate from a different insurer, you may want to use this opportunity to shop around and get an application from an insurer with lower pricing. You may submit several life insurance applications to get quotes on your policy. To reduce the death benefit of your policy, you will be converting your policy to a smaller policy by taking out a new policy since term insurance does not have a flexible death benefit option.
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Turn in your new application. The insurance company may request additional underwriting (a health examination). However, this is unlikely since you are decreasing the death benefit amount. A new policy will be issued, but an application for coverage must be submitted first. Do not cancel your old policy yet.
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Get the temporary insurance binder. A temporary insurance binder is proof of temporary insurance. Once your insurer has accepted your insurance application and issued the new policy, they will cancel your old policy if it is a conversion. If your old policy was not eligible for a conversion, you must cancel the policy yourself. Only cancel the policy after you have secured the new insurance policy.
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