What To Keep In Mind When Switching Life Insurance Policies

If you have life insurance but want to switch to a more attractive policy, you could defeat the purpose of coverage by moving too quickly. Experts recommend proceeding carefully in order to make sure you don’t go uninsured while waiting for the new policy to kick in.

FinancialHighway recommends keeping your old policy active until you’re sure you don’t need it. Since life insurance is all about making the safe play, double-up on your conservatism by waiting for your new insurance to start before canceling the old policy. A gap in coverage could make all your premiums go for naught.

Also be aware that most policies come with a two-year period that allows the insurer to deny a claim if it’s brought on by suicide or purchased under false pretenses — for instance, not telling the insurer about a medical condition. The period starts over if you get a new policy.

How To Replace a Life Insurance Policy [FinancialHighway]


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  1. FatLynn says:

    More importantly, if you don’t have dependents, dump your life insurance.

    • az123 says:

      That is just a stupid suggestion, having no life insurance is dumb unless you have money to pay for final expenses etc… sure no dependents means no million dollar insurance, but you need to be realistic and not stick your family with expenses

      • The Lone Gunman says:

        No family, no dependents, no life insurance.

        Don’t care about ‘final expenses’, because dead.

    • Nigerian prince looking for business partner says:

      If you’re thinking of having kids, it’s often better to buy insurance while you’re young so you can lock into better term rates. It’s also exceedingly difficult to buy a policy once you’re pregnant.

      • kennedar says:

        We just upgraded our life insurance, which required an entirely new application process, while I was about 29 weeks pregnant. There were no issues what-so-ever, other than informing them of the pregnancy. They made a note that my results would be skeewed by the pregnancy and all was good. We still qualified for the best rates.

  2. Nigerian prince looking for business partner says:

    It’s also a good idea to not get too excited about the rates quoted from your broker until you get your physical done.

    And also be aware that any potentially negative health information from your application will wind up on the Medical Information Bureau (MIB) report and can be used against you when it comes to applying for health insurance. If you’re switching health insurers, it’s generally a good idea to wait until the new health insurance is in effect, before applying for life insurance, which has a more involved application process.

  3. John says:

    Disagree with people who say if you have no dependents, dump the insurance. If you have a non-working spouse, or a mortgage, or intend to have a funeral, you should keep it.

    Changing insurance is a problem, though, as you pass “age attained” and wind up locking in a higher premium for 20-30 years.

    • AustinTXProgrammer says:

      A non working spouse is a dependent. And the bank can take the house after you die with no further recourse if no one needs it. If you have a lot of equity your estate can sell the home instead.

      Funeral expenses don’t have to be sky high, make your wishes for a modest funeral known in a will or something. The price for the same service can range from $800 at a locally owned funeral home to $3500 at a Dignity owned place.

      • Nigerian prince looking for business partner says:

        I know many couples, with one spouse earning significantly more than the other, and both are on the mortgage. Even if the couple is renting, I would imagine the surviving partner would want to at least have enough money to remain in the apartment until the lease is up.

  4. There's room to move as a fry cook says:

    #2 is fraud (stop payment & keep 30 days ‘free’ coverage) and will cost you a stop payment fee

    • Nigerian prince looking for business partner says:

      It will also backfire if you ever apply for insurance down the road.

      One of the standard questions for life insurance applications (as well as health insurance) is along the lines of have you ever had “coverage terminated because of fraud or non-payment in premiums?”.

    • AustinTXProgrammer says:

      My coverage has a 30 day grace period if I don’t pay them (not stop payment). If I were to die they will subtract the premium from the payout (just make it not look like a neat number.)

  5. kc2idf says:

    You should also keep in mind that it may take some time for the new insurance to be started. I was chomping at the bit when I changed mine over because I was dumping a whole-life policy for a term policy, and the dump part ultimately unleashed a small flood of equity that I used to pay down some debts. This made it very tempting to jump the gun, but it ended up taking several months to get the new policy in force. Don’t jump the gun and plan for delays.

  6. bwcbwc says:

    I like to ladder my life insurance policies the way some folks ladder their certificates of deposit. Even if I’m a little off on the timing of replacing one policy, I’m never completely without coverage. Plus it allows me to adjust coverage and term for my age more frequently.