There are many reasons that may prompt you to replace a current life insurance policy with a new one. Insurance needs may have changed; better and more affordable coverage may be offered; or confidence towards a specific agent or insurance company may have increased.
Regardless of your situation, the Illinois Department of Insurance notes that before you go through the process of replacing a policy, you should consider whether it is worth doing so or not.
“If you already own a life insurance policy or annuity, you should think twice if someone suggests that you replace it – especially if you have had the policy for a long time,” said the Illinois Department of Insurance.
Before changing life insurance policies or annuities, Illinois consumers should consider the following suggestions made by the department:
- Make sure you still qualify for life insurance, which may have been affected by a recent medical incident.
- As cash values take time to accumulate, determine whether it is worthwhile to replace a current policy or not.
- See that your new insurance policy provides the same benefits listed in your old policy, as policy features are subject to change.
- Understand that you may have already satisfied limits in your old policy – such as a two-year “incontestable” clause – that will be reset with a new policy.
- Before changing companies, talk to your insurance provider as they may offer a better deal to keep you as a customer.
Though you should be careful when switching your life insurance coverage, there could be instances for which changing a policy could be extremely beneficial. For example, buying a new home or having a child may call for additional insurance coverage. Keep in mind that life insurance premiums are currently at an industry all-time low, so contact your adviser if you have any questions regarding your policy.