How to Switch Life Insurance Policies

How to Switch Life Insurance Policies

We all want to be 200 percent sure that we are getting an affordable life insurance plan at a good price. Often we decide to change the plan and move to a different company because of the dilemma. However, before you decide to switch to a different company weights the pros and cons of the current plan and think decisively.

 

There are many company websites online that can help you in comparing life insurance policies.

 

Need For Changing the Life Insurance Policies

 

Many factors can contribute to switching to a different life insurance policy by an individual.

 

  1. End of the Term Plan- When an individual opts for a life insurance plan, he/she is asked to choose the length of the plan you want coverage for. After reaching the end of the Term plan, the premium level will most probably be raised for the next term.
    So you have a choice either to reassess the situation again of whether you need the life insurance plan anymore or not and whether you want to continue with the plan of the current company or another company.
  2. Change in the Situation- Life Insurance Policies provides coverage for long terms. The duration of these plans are quite long, and in between, a person may incur different circumstances. This can be the reason why a person may change their policy to another one if the current plan is not providing the coverage according to the needs.
  3. Financial Costs- This is one of the main reasons why people decide to change their insurance policy- the cost of the premiums. Your premium can become expensive because of two reasons-
  • Age-related factor and increased risk of illnesses that comes with age.
  • The large insured amount may no longer be needed due to changed circumstances (children now financially independent).
  1. Mortgage- One of the biggest reasons for taking out the insurance plan is that after the death, a huge amount is paid which can help in paying the remaining payments of the debt or any other mortgage. The situation related to your debt can change for better or worse. Moving to a bigger property may increase your cost. In this way, your existing policy is no longer in accordance with your circumstances and therefore, it may be the right time to change your insurance policy.

Why You Should Consider Switching Your Life Insurance Plan

Switching to different types of life insurance policies is not that difficult a task as it seems. However, you should take into consideration some important factors.

  1. High Premiums- When you change your current policy with a new one, you may find that the new premiums are expensive than the earlier one. This can happen because you may have gotten old and the risks have been increased with age.
  2. Stretched Waiting Period- In most cases, there is a long waiting time of around one year or two before you can opt for the claim of the new policy. This can be problematic for a few people. When opting for a new policy, don’t forget to look into this factor.
    There also exists a Contestable Period and Suicide Provision. This clause is quite common with the life insurance policies and according to this clause, when individual changes to a new policy, in the initial two years, death benefits can be denied or cannot be contested. After the two year period has expired, this clause also gets expired. The person loses this provision when they are switching to the new policy.
  3. Company Reputation- Before switching to the new policy, always do thorough research about the company and its reputation. Try to find out about the company and its experience in this field, its claim ratio and so on.

 

Information Needed For Switching To a New Policy

If you have decided to change your insurance policy, it is important to be aware of the important information like if the new insurer is licensed or not. After you have checked the necessary details, switching to a new policy is easy. You will be asked to provide the following details:

  • Serial number of the existing life insurance policy
  • Insurance carrier
  • The expiration date of the current policy

 

Can You Keep Two Life Insurance Policies At Once?

The answer to this question is yes. There are many arguments in favor of this question. While you can invest in two life insurance policies, it may be an expensive way of getting the financial coverage that you want.

 

You can always look for a better way to get all the coverage you want from just one policy rather than two policies, and if possible, this will be done at a lower price.

 

Steps Required Changing To a New Policy

While many think that it is a complicated process to switch to the new policy, in reality, the process is quite easy and pretty straightforward. Just follow these simple steps and then you are good to go.

 

  • Realizing How Much Financial Coverage You Need- Our life situations change with time and the financial coverage may also increase with time. Changed lifestyle, an addition of a new member into the family or increased expenses can be one of the causes. You should always take into consideration these factors and decide on how much coverage you want. Finally getting a figure will help you understand the financial cover your family may need.
  • Choosing New Policy- Always make sure that your new policy is in place before you cancel you cancel your current plan. Buying a new policy may require taking few medical tests, and there are high chances that you won’t be getting the same coverage that you were previously getting. Keep in mind this factor, as you don’t want any difference between the coverage.
  • Canceling Your Current Policy- Once the policy is in place, you can cancel the current plan. You cannot just stop paying for the plan and expect that the plan will get canceled on its own. If the plan is a whole life policy, you may have accrued value in the account. You should call your insurance agent and take their hell to cash you out or otherwise you will lose the amount that you have invested.

 

Factors to Consider Before Opting For Multiple Life Insurance Plans

If you opt for more than one life insurance policy at one time, it will give you a greater sense of relief as you are providing your family with better protection. However, it is important to keep a few things in mind when you are taking multiple plans.

  • Managing Multiple Plans- While having multiple plans means providing greater security to your loved ones; it can still create a lot of confusion and may even cause mismanagement. You may need more time to review it.
  • Extra Cost- Different life insurance plans means payment of expensive premiums which can become a costlier affair in long-term.
  • Investing More Time- You need to dedicate more time to find appropriate plans and insurance providers along with time to review the plans and thoroughly check it. You need to double sure whether the plans suit your needs and provide the all-around coverage or not.

 

 

 

Few Tips for Switching To a New Policy

If you have finally decided that the old plan isn’t suitable for you anymore and that you have invested your time and research in finding a new plan, then you can use these handy tips for a smooth transition process. These tips can come handy and help you in saving time and money.

  • Never cancel your existing plan unless and until the new policy has not come in to effect.
  • Calculate all your expenses in advance. Take into consideration all the costs such as the commission of the intermediator, any fees, and upfront costs and so on- so that you know how much your new policy is going to cost you.
  • Always ask for vital information to your insurance provider beforehand. Ask for information such as any surrender fees involved or the taxation costs on the old policy so that you know how much it is going to cost you for switching to a new policy and it won’t make the new policy expensive.

 

Conclusion

Everybody wants to buy the most lucrative life insurance policy. However, the reality is somewhat different. No such thing like ‘Best Deal’ exists, and everybody requires doing a bit of hard work by reviewing your policy now and then seeing other viable options in the market.

 

Before switching to a new policy, you should always check with your current insurer if they are ready to give you better rates or not. If they are not ready to do so, you can always look for better options in the market and save you money. You only have to make sure of one thing that they are providing better coverage to your family.

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