Can You Change Your Life Insurance? How to Review Coverage and Make Changes

Can You Change Your Life Insurance? How to Review Coverage and Make Changes

The VA provides valuable life insurance benefits to veterans, service members, and their families, giving them peace of mind knowing they are protected. The VA created these life insurance programs to provide affordable coverage to those who may not obtain coverage elsewhere due to the extraordinary risks military service poses.

Despite these benefits, some military members may be able to find other policies that better meet their needs, especially if they are young and healthy.

The following will discuss the process for how to change life insurance policies.

Can I Change My Life Insurance Policy?

As an alternative to canceling your current policy and shopping around for a new one, you can ask your insurer to increase your coverage if you find it insufficient.

Depending on your policy, you may be able to add more or less coverage. Check with your insurer.

You may increase your protection amount if certain life events occur, such as moving or having a child.

Despite the increase in premiums, you may not need to undergo new health or job checks.

If your existing policy does not allow coverage changes, you will need to find a new insurer. However, consider maintaining your old policy and taking out “top-up” insurance with the new company instead of simply canceling your policy.

In general, the younger you are when buying a life insurance policy, the cheaper your premiums are. In some cases, keeping your existing policy is more affordable than getting a new one, so it makes sense to do so.

The difference may be even more significant between the original policy and the new one if you have encountered any health issues.

When you apply with your new insurer, you should be sure to tell them if you are adding them to an existing policy.

As a result of new legislation, insurers cannot price premiums differently for men and women.

When Veterans Might Consider Changing Their Policy

Life insurance policies are held for years, but the type you initially select will depend on your financial and life situation when you buy them. Over time, your insurance might not give you the protection you need.

There are a few reasons you might want to change your life insurance policy. Changing your policy to better reflect your changing life is an excellent way to ensure that you’re adequately covered in the event of a significant accident or worse.

Here are some common reasons you might want to change your policy.

Paying off Your Mortgage Sooner Than Expected

If this is the case, your insurance value may decrease, as well as your premiums.

Growing Your Family (Having a Baby or Getting Married)

You will have more dependents to provide for when you have children and grandchildren in the case of your death. Similarly, if you get married, you’ll want to ensure your spouse is covered.

Starting or Growing a Business or Increasing Your Salary

The more your standard of living rises, the more life insurance you need. The house and car you buy with extra money may also have debt implications, which your family will be liable for if you’re no longer around. A salary increase will result in more money, but If you don’t plan wisely for tax minimization, you may also wind up paying a large tax bill.

If you own a business or are growing one, you’ll want to make sure your family has the funds to meet the company’s liabilities and money to live should you pass away.

How to Change Your Life Insurance Policy

If you need to change your life insurance policy, you have three options.

  1. Make your current policy more comprehensive
  2. Increase coverage by adding an additional provider
  3. Cancel your current policy and take out a new one

The coverage you receive from your current policy can be increased or decreased depending on the provider. Occasionally, you will need to undergo a health check to update your policy, but this is not always necessary.

If your current insurer doesn’t let you change your coverage level, you may need to consider other insurance providers. One should also compare quotes from multiple life insurance providers with a comparison tool such as ours, so you’re sure you’re getting the best deal.

Related Article: Life Insurance Calculator for Veterans: What Does Life Insurance Cost?

Sometimes, it’s best to keep your current policy and get an additional policy from another company to cover the shortfall. For instance, those with an irregular income may find this o be the case.

If you’re not satisfied with your current policy or no longer need it, you can also consider canceling it. However, make sure you carefully consider the potential impact on your family before foregoing life insurance altogether.

Reasons You Can Change Without Costs

Many providers allow you to change your policy under certain circumstances, but not all. You can amend your existing life insurance policy with your current provider. Alternatively, you can cancel your policy and find a new plan that meets your needs better. Just make sure you consider upfront fees, taxes on life insurance, and premiums if you’re thinking about switching life insurance policies.

How Often Should You Review Your Life Insurance Policy?

According to many financial advisors, you should review your life insurance policy every 12 months. However, your life insurance may not need to be updated if you have not had any significant changes over the past year.

If you have had changes, such as the birth of a child or buying a home, review your financial situation and see if your policy still meets your needs.

Change Life Insurance Beneficiary: How to Make Changes on Your Life Insurance Policy

The beneficiary is the person who receives the policy benefits if you die. It is usually relatively simple to change the beneficiary of your life insurance policy if needed.

Changing your beneficiary can be accomplished by contacting your insurer, and you should receive a change of beneficiary form from your insurer. Upon completing and receiving your life insurance application, you can update it within 24 hours of receipt.

There are some circumstances where you cannot change the beneficiary. You cannot change some beneficiaries without their consent, which means you cannot change the policy. In these cases, it’s important to carefully consider your beneficiary before naming them and understand your policy terms.

If your life insurance policy has been placed in a trust, you should also be careful when changing the beneficiary. Many people use trusts to avoid paying inheritance tax on a lump sum – however, if the beneficiary changes, the money may be subject to tax if you die within seven years of the change.

Can You Change Life Insurance Policy Company?

You will have to reapply for coverage if you change life insurance companies. When the provider reviews your application, they will decide whether or not to offer you a policy and on what terms.

Life insurance policies can be changed or canceled, but there are other options. Consider topping up your current policy with a new one. If your circumstances change, you may also be able to get a policy amendment from your current insurer.

Your insurance provider will determine the terms of your new policy based on your age, health, and circumstances. Therefore, it may be better to amend an existing policy.

Life Insurance Policy Changes: Things to Remember

It is essential to do your research before switching life insurance companies.

The cost of life insurance is generally lower when you’re younger, so changing your policy might lead to higher premiums. In addition, you become more vulnerable to health risks as you age, and if your health status changes, you are not guaranteed to receive a new policy.

Your cover will end if you cancel your existing policy before the new one is in place, and you won’t get your money back.

Here are some other things to consider before changing life insurance companies.

Medical Exam

Medical exams are a requirement of applying for life insurance, and there is also no way to carry over the results from your previous policy to the new one. The new provider’s responsibility is to consider your current health status and medical history, so if you’re in poorer health, you may face increased premiums and less favorable terms.

Contestability Period

The contestability period is a window of time where insurance companies can investigate and deny claims. This period is two years in the U.S. and one year in other countries.

When you switch providers, you are subject to the contestability period, which states that the insurance company has the right to investigate a claim if the policyholder dies within the first two years of buying the policy in the states. In such cases, the carrier may deny the claim outright or deduct the premiums it would have charged.

Paying Upfront Fees

Some insurance companies charge surrender fees when switching your whole life insurance policy from one company to another.

Most of the fees associated with a life insurance policy are upfront. Therefore, to save money, you must believe that the savings from a new policy will be worth paying these upfront costs again. It will take time for the revenue to outweigh those costs. You must pay premiums long enough for this to be a profitable transaction.

Potential Taxes

It is always possible to incur new taxes if you change your life insurance policy. The cash value of your original policy might exceed the policy value if you sell it or surrender it, and in such a case, the difference will be taxable.

How to Switch Life Insurance Companies

Although switching your insurance may seem complicated, you can easily complete the process. Follow the steps below to make the process as simple as possible:

You can choose from a variety of life insurance options. It may be necessary for a medical exam to be required for term insurance, and age may also influence the price of these policies. The replacement of cash-value products, such as whole, universal, and variable life insurance policies, can be more difficult and expensive since surrender charges, 1035 exchanges, and policy loans are often involved.

Don’t forget to purchase enough coverage. As soon as you have chosen the type of policy, decide how much coverage you need. Make sure you consider how your beneficiary will utilize the death benefit payout and what you want it to cover.

If you adjust your policy, you may be able to save money. If you know what changes you want to make, you can talk to your current insurer about adjusting your policy to fit your new needs. Asking doesn’t hurt, even if the option isn’t available. This tip is constructive for people who want to switch from term to whole life insurance because some companies offer this choice. Also, depending on the type of change you are looking for, you may not need a medical exam or health questions, which is less likely if you switch insurers.

Actively maintain your policy. Insurance professionals recommend purchasing a new policy before canceling your old one. Gaps in insurance coverage are a severe concern. Generally, an insurer has a two-year contestability period before your new policy can begin paying out. Find out how long the contestability period is before switching insurance policies.

A licensed insurance agent can help you ensure that you get what you want from the switch.

Deciding if Changing Your Policy Is Right for You

Changing your life insurance policy may be easier than you think and may be beneficial in the long run.

If you’ve had significant life changes, such as buying a home or having a baby, you may need to adjust your life insurance to better meet your needs. You can do this by adjusting your current coverage, adding another policy to your original, or canceling and obtaining a new policy.

Before canceling your existing policy, make sure your new policy is in place and that the contestability period has ended.

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