You may already have a life insurance policy and considering getting additional coverage. Should you keep your existing policy in force and supplement it with additional coverage, or replace the old policy with a new one? There are several factors to consider when deciding, and I’ll cover the important ones in this blog post. You can also compare rates right below this paragraph or continue below to read more about replacing your policy or supplementing with a new one.
If you need additional life insurance coverage you should consider several factors regarding what to do with your existing life insurance policy. What type of policy do you currently have? Do you currently have a term policy, a universal or whole life policy? If you have a term policy, consider how many years are left on that policy. If you only bought it within the last few years and it still has many years left on the initial term period, it may be worthwhile keeping and getting a new policy for the additional coverage.
If however you bought the term policy years ago and there are aren't that many years left on it, you may want to replace the policy.
If your existing policy is a permanent life insurance policy you need to look at several factors. When did you buy the policy? Is there cash value built up in the policy? Will I have tax consequences if I surrender the policy and withdraw the cash (there may be taxes owed if that is the case). If you have had the permanent policy for many years, you may want to keep it. On the other hand, if your needs have changed and today you only need a term policy, you can potentially save money by replacing the permanent coverage with term.
If you currently have a term policy and looking to get a permanent policy, you should also speak to an agent (like us) and find out if you can convert your current term policy to a permanent policy.
Another factor to consider when reviewing your current policy is what will be the total cost of keeping my existing policy and buying a new policy? Can I afford those payments? If your existing policy has a high premium and you won’t be able to afford the new payment with an additional policy, you may want to replace the existing policy for a cheaper policy – for example switching from permanent coverage to term coverage.
Consider your current health when deciding to keep or replace your current life insurance policy. Has your health deteriorated since you bought life insurance? If that is the case you may be wise to keep your existing policy since replacing it may be more costly due to your health. However if your health has improved – for example you lost weight, or quit smoking, you may be able to save money by replacing the existing policy.
If after reviewing your options and you still aren’t sure what to do with your existing policy, you don’t need to decide right away. You can apply for new coverage and see what health rating you get, and what the price will be for the coverage. Then you can compare pricing between replacing your policy with a new one, or just supplementing with a new smaller policy.