If you are thinking about terminating life insurance coverage that you currently have in force, here are some things you should consider.
- If you decide to replace your policy, don't cancel your old policy until you have received the new one.
- It may be costly to replace a policy. Much of what you paid in the early years of the policy was the company's cost of selling and issuing the policy. You may pay this type of cost again if you buy a new policy.
- Ask your tax advisor if dropping your policy could affect your income taxes.
- If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable.
- You may have valuable rights and benefits in the policy you now have that are not in the new one.
- If the policy you have now no longer meets your needs, you may not have to replace it. You might be able to change the policy or add to it to get the coverage or benefits you now want.
- At least in the beginning, a new policy may pay no benefits for some causes of death covered in the policy you now have.
In all cases, if you are thinking of buying a new policy, check with the agent or company that issued you the one you have now. When you bought your old policy, you may have seen an illustration of the benefits of your policy. Before replacing your policy, ask your agent or company for an updated illustration. Check to see how the policy has performed and what you might expect in the future, based on the amounts the company is paying now.
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This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified insurance lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local insurance attorney to discuss your specific legal situation.
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