| |
Should I replace my existing life insurance policy?
Replacing an existing life insurance policy can be costly and may not be in your best interest. When you apply for a life insurance policy you will be provided with a “Definition of Replacement” form which will explain what constitutes a replacement.
If you intend to replace your policy, than no later than when you sign an application for a policy to replace your current policy with a new policy, you will receive a copy of a "Important Notice Regarding Replacement or Change of Life Insurance Policies or Annuity Contracts," and a “Disclosure Statement.”
These documents give you information to think about before replacing your life insurance policy or annuity contract Some factors you should take into consideration if you are thinking of replacing your policy Contact your present life insurance company to discuss the proposed replacement of your current policy.
Your company may be able to help you make a change to your current policy that is more favorable than replacing your existing coverage. Since you are older than you were when you purchased your original policy it is likely the premium for the new policy will be higher due to your age.
If your health status has changed for the worse the premiums for the new policy will be higher. The contestable and the suicide provisions will begin again in the new policy. If your policy has a cash value you should know that the initial costs for such policies are charged against the cash value in the earlier years.
The replacement of such a policy by a new cash value policy results in you sustaining these costs again. Your present policy may also include surrender charges which you will incur if you surrender your policy during the surrender charge period. Alternatively, there may be a surrender charge period which has already ended on your present policy.
You will want to find out if you will be subject to a surrender charge period in your new policy.
|
|
