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Life Insurance Renewal Time
You just received a letter in the mail from your life insurance company informing you that your term is up and your premium will now be going through the roof.
Your first question is why.
When you purchased your policy (if you can remember that far back) it was for either a ten or fifteen or twenty year term. That means that the life insurance company guaranteed that you can keep your policy to (in some cases) age 80 or 85 but that the premiums would contractually change at each of the 10 or 15 or 20 year intervals.
I have good news and bad news. The bad news is these new premiums are based on mortality taken from years ago and are about two to three times the market rate. That is a bad deal on the surface but not so bad if you have a life threatening illness or disease.
The good news is, you can shop this out to another company, or even the same one, go through the medical tests and answer all of the questions, and if you qualify, you can purchase the same policy for almost what you were paying in the first place.
This is possible because of the new preferred life insurance rates that have been around for over 15 years.
Life insurance companies have categorized their plans as level 1, 2, 3, or 4. The category you qualify for is based on a number of criteria: height and weight, blood pressure, cholesterol levels, family history, your own historical health history, etc.
Once these have been assessed, your rate is determined. To qualify for level 1, you must be as healthy as Dr. Oz but even a level 2 or 3 isn’t that expensive.
It puzzles me that the life insurance company that sends your renewal does not offer an alternative. It’s an easy question – here is your guaranteed renewal rate but if you answer these medical questions and pass a blood and urine test you can have a lower rate. I suppose they don’t care if they lose the business. That is if your agent is diligent enough to call you and offer to shop it out. Most people though get the letter and ignore it, choosing instead to pay the higher premium.
So the next time you get a letter like that in the mail, please don’t ignore it, call your agent or call me and see if you qualify for a new policy. It might even time then to analyze your life insurance policy.
10 or 20 years is a long time for things to change and your life insurance needs will have changed along with everything else.
What is your mortgage balance? Have you had more children? Have some left the nest? Any other debts paid for or added on? Has your income changed? These are just a few of the questions you need to ask to determine whether the policy you have now is too little or too much.
Maybe it’s even time to do this before the term comes up. If you feel a little low on the life insurance area, call me for a review. It never hurts to stay current.
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For a thorough evaluation of your insurance needs, please speak with our advisor.