Canceling Your Current Life Insurance Policy
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. You then have
20 days to review your new policy and decide if it is
what you wanted.
- 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.
To assist you in evaluating the proposed and
the existing insurance many State's regulations require
that the agent advising or recommending replacement:
1.
Provide the consumer with a summary of the policy or contract
to be issued.
2.
There is a twenty-day free look period for you to decide if
you want to continue the policy or cancel for a full refund
of your premium.
3.
The company is required to notify your present company of the
pending replacement of Your Current Policy.
Review your life insurance program with your
agent or company every few years to keep up with changes in your
income and your needs.
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