Before Replacing Your Insurance Policy

Do you have diabetes and want to replace your existing insurance policy?

Before you head out and replace your old insurance policy, there are some important facts you should know beforehand.

Before You Replace Your Existing Policy – Check if You Have a Conversion Option

Before you replace your existing policy you might want to check out whether you have a conversion option in your current policy.  Going this route with your current company might make better sense than replacing your policy altogether.

Many people think that when you buy term life insurance, the policy lapses.  This is not true as you have coverage until age 95, and the insurance company will simply re-calculate the premium of a new term and will notify you accordingly as to what that will be before it lapses.

The bad news is that the cost for the new term policy will be significantly higher, but if you have a conversion option, there’s good news.

What’s the good news if you have a conversion feature?

Many term life policies allow you to convert your term insurance into any permanent insurance policy such as whole life or universal life which might be better for your individual circumstances.

The good news is that you can often do so without proof of insurability even though your health has deteriorated such as with the onset of Type 2 Diabetes for example.

Also, the premiums may even be more affordable than getting a new term policy.

Be careful though, the conversion option varies from company to company and some conversion options are not advantageous.

Beware of the 2 Year Contestability Period on a Replacement Policy

If you decide to get a replacement policy, the 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.

If for any reason, you have fraudulently or mistakenly answered any of the questions they asked about your health incorrectly; your claim could be denied.

It is extremely vital you always answer all questions about health correctly and honestly because they will find out if you were being untruthful especially during that 2 year contestability period.

If you’re not sure about one or more of the medical questions they ask, talk to your agent or make an appointment to see your doctor to help you fill out the questionnaire application.

Always be honest.