Do you have an old life insurance policy that you pay into, but haven’t reviewed it in several years? Since a single life insurance policy is designed to last for decades, few people give a lot of thought about their coverage, much less take time to regularly examine their policy to ensure it still meets their needs. Generally speaking, it’s not in one’s best interest to replace policies, but there are exceptions. For example, a life insurance plan purchased just a few years ago could come up short on meeting your family’s changing needs.
Reasons to Replace a Term Life Insurance Policy
According to the American Institute of CPAs, there are several reasons why you might want to consider replacing your term life insurance policy. Since term life insurance provides guaranteed cash benefits for a specific period of time, you may decide to purchase a replacement policy to extend the term of your coverage. For example, if you bought a 10-year level term policy in college to cover the cost of your student loans, you may decide to replace the policy with a 20 or 30-year term plan once you get married and have children who will depend on you for financial support.
Another reason to replace your term life insurance is to increase the value of your death benefit. Over time, the cost of living increases as does your annual income. Your household may also grow to include more dependents, more debt responsibilities, and expensive future costs, such as college tuition. If $250,000 was enough to provide your spouse with support when you got married, you might now require closer to $1 million or more to support children as well.
Reasons to Replace a Whole Life Insurance Policy
Whole life insurance policies are designed for long-term retention; however, there may be some circumstances under which a replacement policy could provide a better alternative. For example, whole life coverage accumulates interest at a guaranteed rate over the life of the policy. If you are now eligible for a more attractive rate than when you purchased the policy, a replacement plan could provide better long-term financial benefits. Unless you are significantly older or in worse health than you were when you purchased the original policy, you may be able to secure better coverage with improved cash benefits with little increase in your premiums.
Talk to Thiel Insurance Group Before Replacing Your Life Insurance Policy
Regardless of whether you think your existing plan is sufficient or you need new coverage, we recommend talking with a trusted agent before making a decision. A periodic review of your life insurance coverage can help ensure you and your family are protected against the unexpected in life. For more information about life insurance replacement or for help calculating your own life insurance needs, contact our office today. We are happy to review your policy and provide you with options that will protect your family’s finances for years to come. We look forward to serving you soon.