Buying a life insurance policy, if done wisely, is a task undertaken once or twice in your life. Adjusting your policy, on the other hand, is a task that must be attended to regularly.
Warns of financially unsound coverage adjustments.
Lists wise coverage adjustments.
Outlines when to reassess your life insurance policy .
Premiums can vary by as much as 50% for the same coverage and options, so it pays to get quotes from as many reputable insurers as possible.
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As stated earlier, life insurance is something you should purchase about once in your life. Often people make the mistake of buying a policy, realizing they need more coverage, and buying another policy a few years down the road. This is an expensive mistake - especially if you're dealing with permanent insurance policies.
If you don't understand life insurance, buying multiple policies throughout your lifetime seems unavoidable. So unavoidable, in fact, that some insurance agents count on you thinking just that. A common practice among insurance agents is to advise you to use the cash value from your cash value life insurance policy to buy a newer one, which is often more expensive, but offers more coverage. This technique is called "churning". The insurance agent gets a big commission and you lose your cash value accumulation.
Instead of falling prey to these or any other scam, its best to know your options and...
Life insurance policies are easily constructed to fit your needs, but the policy you choose must allow you the freedom to adjust your coverage amounts as much as you foresee you'll need to in the future.
If you want to buy a permanent life insurance policy and foresee marriage, a new house, kids in your future make sure you have the option to increase and decrease coverage and cost. Otherwise, you run the risk of getting too much or too little coverage or having the policy become too expensive for your budget or needs. If your policy can accommodate your changing coverage needs, you wont be forced to cancel it and lose the money you've invested.
The necessity for your insurance company to allow coverage modification is smaller if you purchase a term insurance policy, especially if the duration of coverage is just a few years. Basically, the fewer amount of years you have to plan ahead, the less freedom you need. If your term insurance policy is for twenty years, its still important to have a lot of freedom to alter your coverage while if its for five years, you can do with just a little.
Whether you buy a new car, welcome a new addition to the family, or land a new job, or are planning to within your lifetime, you need the freedom to periodically increase your coverage.
Later in life - after you've retired or seen your last child graduate - you don't have as much need for life insurance. With fewer financial obligations, you have the option to decrease you coverage.
In unfortunate times, your policy may start to use up too much of your income. Instead of canceling your policy, look into reducing premium cost.
If you'd like a little help with designing a policy or advice on changing your current policy, get in touch with an agent from one of our partner carriers, who can design a policy to fit your specific needs.