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
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
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.
time a person has been on the current
coverage can work both ways. On
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.
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
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
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.