Term Life Insurance Articles
Is It Possible To Change The Term Length Of A Policy At Any Point In Time
2010-01-21
Term life insurance is a great buy that can protect property or a family's finances in the event of a policy holder's death. However, for various reasons, it's sometimes helpful to extend or shorten the length of the term of the insurance. Many consumers wonder whether this is even possible with their insurance company, and what the potential advantages and disadvantages to a change in a policy's term might be. The answer is a bit complex, and depends greatly on what you're trying to do and how your life insurance company operates.
Most companies will allow term life insurance coverage to be extended, although the exact terms relating to this extension will vary from company to company. It's important to note that the relative risk to the insurer goes up when a term is extended, because there's a greater chance of the policy holder dying within the period of the policy. Therefore, when coverage is extended, say, from 10 to 30 years, a new term life insurance quote will be issued. It will be higher than the original quote, so term life insurance policy holders should be ready to pay more for their premiums. However, by sticking with the same insurance company and negotiating a bit, a policy holder might be able to get a better rate than he or she would be able to find by simply waiting for the policy's term to end and then looking for another policy.
Reducing the term of life insurance coverage is much trickier. Life insurance companies obviously don't want you to do this, because your rate would decrease and they'd make less money off of your policy. Read your contract carefully--it may or may not be possible to reduce the term of your policy. If it's not possible, you'd have to cancel your policy and buy a new, shorter term policy. This can have several major disadvantages, especially if you've bought convertible or return of premium (ROP) life insurance. Policy holders with these insurance types won't be able to get any part of their premiums back, and losses can be huge.
Different insurers operate their businesses in completely different ways, so you'll have to carefully look over your contract and speak with your insurance agent in order to find out whether your life insurance coverage period can be reduced or extended. In most cases, it's possible to make changes, but exactly how those changes are carried out is up to you and your insurer. Consumers can improve their bargaining power by getting several term life insurance quotes online and using these in the negotiations.
