Purchasing a life insurance policy is the best thing that you can do for your family, but just because you have a life insurance policy doesn’t mean you have the BEST coverage. There could be some areas of your coverage that you could improve, and maybe even save some money.
We run into people all the time who purchased a life insurance policy and they either forgot about it or they were sold something that didn’t meet their needs. Not having adequate life insurance coverage could have dire consequences on your family, or even your bank account. It’s easy to buy a policy and then forget about it, but as your life changes, you may find that your life insurance policy doesn’t fit your need perfectly like it did when you bought it. If you are doing an evaluation of your current insurance policies please keep reading:
5 Reasons Why You Need to Get a New Life Insurance Policy
#1 – You May Have Too Much Coverage
Although having extra life insurance coverage is acceptable and not necessarily a bad thing, my main concern is if your life insurance premiums have become difficult to budget and you have more coverage than you need on top of that. The number one thing to keep in mind with life insurance is you don’t want to break the bank with your premium payments. Having some coverage is better than no coverage, so always purchase a plan and the amount of coverage that will fit into your family’s budget.
The best part of this is that if you ever find yourself having trouble making your premium payments you always have the option to adjust your life insurance downward. Meaning, you can lower the face amount (death benefit) till the premium payment fits into your budget. You can also decrease the term length of your term life insurance policy allowing you to bring the premium payments down as well. If you have less debt than you did before, your spouse has started working, or you make less every year than you did before, you could have too much coverage.
It’s important that you find the delicate balance between having enough coverage, and not paying for more coverage than you need.
#2 – You May Not Have Enough Coverage
Not having enough life insurance coverage may not suck for you at the moment, but it may for your family if you happen to pass-away unexpectedly. Fortunately for you, you can own more than one life insurance policy to make up for any gaps you may have in coverage. Simply fill-out the request on this page to get a life insurance quote for the amount of coverage you need to make up.
When determining if you have enough coverage, there are several different factors that you have to consider. The first thing you have to think about is your debt, and how much you have. If you passed away, all of your unpaid expenses would be left to your family. This could leave them under serious financial strain. Make sure that your life insurance coverage is large enough to pay off all of your debt. Additionally, you need to consider your salary and how many people rely on it. If anything tragic happened to you, your family would lose that income and probably experience drastic financial loss.
One of the goals of life insurance is to give them the resources they need to get through the difficult time and find a way to replace that income. Most insurance experts suggest getting at least ten times your annual salary. As we mentioned earlier, if you discover that you don’t have enough life insurance coverage, you can simply purchase another insurance policy. Not having enough insurance coverage can be as bad as not have coverage at all.
#3 – Your Health May Have Improved
Just as your health has the potential to decline, you may have been able to improve your health since you last purchased your life insurance. We’ve had clients who have high blood pressure, high cholesterol, and who were once diabetic; we’ve even had clients who’ve beaten cancer or sent it into remission. If your health has improved since you last applied for life insurance, life insurance companies are ALWAYS willing to allow you to reapply and prove your insurability.
Improved health means you have the opportunity to reapply for coverage in hope of acquiring lower rates. Whether you’ve been able to improve your health from the use of medication or were able to gain improvements from diet and exercise, there is great potential you could qualify for lower rates than what you are paying right now. You have nothing to lose and everything to gain if your health has improved and you’re trying to reapply for coverage to get lower rates.
#4 – You’ve Quit Smoking
Smoking is one of the easiest ways to pay increased life insurance premiums and quitting is a great way to improve upon your coverage. For obvious reasons those who smoke cigarettes (in particular) or cigars are always going to pay more for life insurance. However, if you’ve managed to kick the habit for one to two years (depending on the life insurance company applied to) you can be considered for non-nicotine rates; which can translate into saving A LOT of money over a year.
I had a client who claimed to me that he didn’t smoke cigarettes. It turned out that his urine sample that was collected during his health exam came up positive for nicotine. Unfortunately, due to being positive for nicotine he wasn’t approved at Preferred Non-Smoker rates for his life insurance policy. We talked about it and he agreed that he needed some life insurance as he had two very young children, despite the fact that his rates were much higher than he had expected as a result of being positive for nicotine.What we did was decrease his coverage amount to bring down his monthly premium to a manageable amount that fit his family’s budget.
The insurance company informed me that if he quit smoking for two years we could reapply for non-nicotine rates. Sure enough I kept in contact with my client and we reapplied two years later for another policy as a non-smoker for the amount of coverage he really needed for his family. Due to his new non-smoker health status we managed to save him a substantial amount of money on an annual basis compared to what he was paying at the preferred smoker health class.
#5 – You’ve Lost Weight
Another way to improve upon your existing life insurance coverage is to lose weight. I know many individuals who were either declined life insurance coverage entirely or were offered life insurance at an increased rate due to their weight and body mass index (BMI). I’ve even known individuals who were approved for life insurance at a Standard health class, who were otherwise “healthy” people except for the fact that they were overweight. They didn’t have high blood pressure, high cholesterol or any obesity related health issue, except for the fact they were overweight.
Regardless, if you are or were overweight at one point and have managed to lose enough weight to be considered “healthy” (let’s assume healthy is your normal BMI level), then you can reapply for life insurance coverage at your newly achieved weight to get less expensive life insurance rates. If you’re looking to save money on your insurance coverage, losing weight is a great way to do that. Starting a healthy diet and exercise program can work wonders on your overall health and your insurance rates.
Additionally, if you had high blood pressure or cholesterol when you originally applied for your policy, losing weight can drastically improve both of those, which translates to lower monthly premiums. If you want to ensure that you’re getting the best rates available, even if you already have life insurance, then work with an independent agent. Instead of working with one specific agent that represents one company, independent agents (like ours at Life Insurance United) represent dozens of the highest rated companies in the nation.
It’s vital that you find the best insurance company to fit your needs and will view your application favorably. Because every company is different, you could receive drastically different rates for the exact same policy. It’s easy to see why it’s vital that you receive several different quotes from various companies before you choose the one that works best for you. Instead of spending hours on the phone talking to different agents, let us do the work for you.