I think we all would agree that life insurance is a must for all consumers. However, clients need to make sure their policy is performing up to their expectations. Replacement of a life policy should always be the last resort, however I wanted to share the most common situations where I see a replacement makes sense.
- Term life that is non-convertible. Most term life policies can be converted to a permanent life policy with no medical underwriting if the policy is within it’s conversion period. A lot of policies I have seen do not let you convert, and even more important not for the full term. What would happen if your term insurance expired soon and you had a sudden decline in health. Wouldn’t it be important to have the option to convert your term life to a permanent policy?
- Term life policies that have a declining death benefit. Magically these policies are still out in the public and sold. If you are currently paying the same monthly premium for your life insurance, and your death benefits is reducing, than logic would tell you to get a quote for a level benefit term life policy.
- Universal life policy that was under funded. Universal life policies exploded in the 80’s. However, often these policies were sold showing unrealistic interest rates and you may be faced with an increased premium in order to maintain coverage. A universal life policy is a permanent life policy that builds cash value. However again, if the policy can’t sustain the interest rate that was proposed in the illustration, than you will start paying more to keep the policy active. Consult with a life insurance broker today to see if this is happening.
- Buying a non-medical policy over a underwritten policy. Non-Medical life policies have begun to get very popular. I would never fault a consumer if they did not want to get a paramed for a life insurance policy. However, I see many consumers who are in perfect health never consider or were never offered a fully underwritten life insurance policy. A non-medical life insurance policy is sometimes 20%-40% higher in price than a fully underwritten plan. Let the consumer make the choice
