This guide outlines when you should look for better life insurance rates and when you should cancel.
We too often stay with the same insurance company and don’t shop around for better prices, and this is the case with any kind of cover, including life insurance rates. Life insurance prices usually vary depending on the types of coverage and the insurer offering the product. The indemnity amount can also make the cost of insurance increase, thus varying in the life insurance rates. But, for the quotation, companies still evaluate the user’s age, health and several other factors.
Check possible changes in life insurance prices directly on the official website of each company. Some values mentioned are ‘as of’ and may have been changed by the insurer. It is worth mentioning that each quote is individual and to know the exact amount you will pay, you need to contact the insurers.
The price varies according to the type of plan you want. Therefore, to know which are the cheapest life insurance rates, you must make a list of what you want to have in your life insurance policy and quote this personalized plan with insurers.
Although companies have to follow common rules among themselves, they can still adopt other rules of their own. We recommend getting an insurance quote from more than one insurer to compare prices and coverage. Thus, you can see which company offers the most advantage and contract one of the best life insurance policies. But, pay attention to the insurance policy before signing the contract to avoid future surprises.
Cancel or look for better life insurance rates?
Life insurance is designed to provide you and your family with financial protection if a tragedy occurs. Yet, sometimes people have good reasons not to continue their policies or to let them lapse. This guide will explore five reasons you may want to cancel your life insurance policy.
1) You’re Financially Secure
Recall that the fundamental reason for getting life insurance in the first place is that you want to provide your family with income replacement, ideally 10-12 times your annual earnings. In other words, if you were to pass away, your loved ones would continue to receive the equivalent of 10 to 12 years of earnings as if you were still here to provide for them.
However, once you achieve financial independence and can retire, you’re no longer working. This means that income replacement is not something you require and you can save on life insurance rates.
2) You No Longer Have Dependents
Along the same lines of income replacement, your family dynamic may also change. In most households, the parents will purchase life insurance while their children are young because it guarantees that the surviving parent would still be able to afford major expenses for them in the future, such as a vehicle, college tuition, a wedding, etc. However, if the children grow into young adults and start earning money on their own, then this may no longer be needed and you don’t need to keep shelling out on life insurance rates.
The other thing that may change is the spouse. Sometimes relationships end in divorce, or there is the possibility that your partner has already passed on. This might also be a circumstance where having a large life insurance policy is no longer required.
3) You Want the Cash Value
if you purchased a permanent life insurance policy that bills cash value (such as a whole life or variable universal policy), and it has substantially grown over the years, you may want to cash it out. One way to do this would be to cancel the policy.
It should be noted that if you do this, all of the earnings the cash value has generated (i.e., the value of the policy minus your contributions from the premium payments and any fees) will be considered taxable income. Therefore, a more tax-friendly alternative might be borrowing against the policy’s cash value.
4) You Believe You’ll Qualify for Better Life Insurance Rates
To get the best term life insurance rates, you have to be in the best health possible. Unfortunately for some people, they may have been smokers, overweight, or had high blood pressure the first time they bought a life insurance policy, and this caused their life insurance rates to be more expensive.
If you’ve worked to improve your health, such as quitting smoking or losing weight, then you might qualify for lower rates. In this case, it can make sense to cancel your existing policy and replace it with a less expensive one.
5) The Premiums Have Become Too Expensive
Life insurance can be a big financial commitment. Permanent policies cost significantly more than term policies. Term policies renewed later in life can also be several multiples more expensive than they originally cost. If, for any reason, the policyholder can no longer afford these life insurance rates or simply sees no value in continuing it, they may cancel the contract altogether.
The Bottom Line
There are several reasons why someone may want to cancel their life insurance policy. The most common reasons include no longer needing the coverage (because they’ve stopped working or the children have grown) or because it’s become too expensive. Additionally, you might discontinue your policy because you’re trying to qualify for lower life insurance rates, or because you’d like to take ownership of a permanent policy’s cash value.
Photo by Kindel Media
