4 Serious Questions to Consider Before Making Changes to Your Life Insurance Policy
10 July 2022
The Life Insurance industry is a very fluid environment. Even if you’ve gone to the trouble of personally signing up for Life Insurance, at one point or another, there’s a good chance you’ll consider switching insurers just because of a newly available better offer. This might sound easy enough on the surface. But changing an existing Life Insurance policy requires a little more red-tape than meets the eye. Insurance Expert Jay MacDonald advises that “Unlike property and casualty insurance, switching life insurance can involve complexities that cost unwary consumers if they rush, or are rushed into a new policy, solely based on a more attractive premium or death benefit.” It’s important to consider factors which transcend cost-cutting when switching Life Insurance. Here are a few questions to ask when making changes to your Life Insurance contract:
1. Are there any waiting periods I should know about?
Depending on the jurisdiction where you’re buying insurance, the law might give insurers a grace period they can use to contest filed claims. Or industry regulations might prohibit consumers from filing claims before a certain window of time has elapsed. Anytime you choose to change your Life Insurance policy, be prepared to endure the limitations of such waiting periods.
2. Are there added costs because of my age?
Buying Life Insurance when you’re younger is a lot less expensive than buying Life Insurance during advanced age. Insurance companies typically make older consumers pay a premium since there is a high probability of a claim being filed.
3. Are there any Tax-related consequences if I change?
If your Life Insurance policy is structured to facilitate annuities, or it’s tied into securities, any cash withdrawals that happen in the process of changing insurers could incur capital gains taxes.
4. Am I dealing with a financially solvent insurer?
Any insurance company you transact with ought to have abundant financial resources. They need to be big enough to make you feel comfortable about trusting them with your money. Before you ever switch insurers, do your research to figure out whether the transition will be an upgrade.
Conclusion:
If you are someone who’s taken the initiative to invest in Life Insurance, pat yourself on the back for making a smart choice. Life Insurance is one of the most important protections to have, especially for people with dependents. That being said, be very careful if at any point you start to get second thoughts about your current Life Insurance policy. Before you try to replace it, weigh the pros and cons, and avoid the mistake of accidentally over-subscribing for insurance. For more information, visit our website or give us a call at 1-800-639-7654 to find out how Adriana’s Insurance Services can help you stay safe. We got you covered!
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