If you have diabetes and it’s costing you too much money, you can replace your policy and save yourself money.
You may have a number of different options you didn’t know about, but please look at the pros and cons below so you know where you stand.
Replacing you existing policy is one choice you have, but that’s not always the best case, so read this article carefully.
How You Can Save Money on Your Existing Policy
Here are several ways you can save money on your existing policy.
1. Lower the Death Benefits or Shorten the Term
One of the easiest ways to save money on your existing life insurance policy is to simply reduce the amount of death benefits you signed for. The majority of life insurance companies will give you a one-time reduction on the death benefits, or let you reduce the length of the term on the policy.
Either of these approaches will lower your premiums and automatically save you money.
2. Request a “Reconsideration”
Some of the things that affect how you are rated depends on your health when you were approved for life insurance. This can include how well your diabetes was under control, your weight and whether you were a smoker.
If your diabetes is under control, you have lost some weight, or quit smoking for at least a year after you got your life insurance, you have one very important option you can take.
You can apply to your insurance company for a ‘reconsideration of health classification’. This means that if you are approved there’s a good chance, you could get bumped up to a better class rate.
If, for example, you had been taking prescription medication to control your diabetes when you applied for life insurance, and have not had to take it for awhile, you could be rated as a ‘preferred candidate’. Or, if you were a smoker when you applied but have been smoke free for a year or more, you could also get a better rating.
Either way, if you get approved for a better health rating, your premiums will be lowered and you will save money.
Top Reasons to Replace an Existing Life Insurance Policy
- Term Insurance is About to Expire
- Financial Rating of your Life Insurance Has been Downgraded
- Your Life Insurance Needs Have Changed
- Your Health Has Improved
Important Facts You Need to Know When Replacing your Policy
- You will have to tell your agent of the replacement and outline the policy details on your new application.
- The new company you submitted your new application will likely have to advise your old company in writing about the changes.
- Your old company will likely send you a letter trying to convince you not to change.
Reasons you Might Want Not to Replace Your Policy
There two main reasons you might not want to change policies.
1. If you have a whole life policy or universal policy you may have to what are called surrender charges.
2. Your new policy will likely contain a new two year contestable period. This means they will have the right to thoroughly investigate the circumstances of your death and if you have fraudulently answered any of the questions, your claim could be denied, so always be honest.
Different Ways to Replace Your Policy
1. You may simply stop paying your premiums and let your current policy lapse.
2. You might do a 1035 exchange into a new policy.
Most Important Thing to Do When Replacing a Policy
Until your new policy is in force, it is absolutely vital that you continue to make payments on your old policy.