Term Life Insurance Articles
The Process Of Renewing Term Life Insurance
2010-01-26
Term life insurance can be a great buy for consumers, as it provides a good deal of security for beneficiaries, can cover a policy holder's debt, and typically doesn't cost too much in ways of rates. However, there's one big problem with term life insurance coverage. Policies need to be renewed at the end of a set term, and the term life insurance renewal process can sometimes be a bit tricky or confusing, particularly for consumers who haven't ever renewed their policies before. It's helpful to head into that renewal process with a good, working knowledge of how your policy operates, and it's vital to know what to expect.
The first thing that many life insurance customers will note when renewing their policies is that their premiums aren't going to stay the same. A new term life insurance quote is usually sent out automatically (sometimes it has to be requested) as the end of the policy holder's term approaches. This new quote will be higher than the premium that the customer has been paying, for a simple if depressing reason: the insurance company is taking more of a risk to offer a renewed term, since the policy holder will be more likely to die in the next term than he or she was in the previous term of the policy.
This can be distressing, but unfortunately it's a perfectly logical approach on the part of the insurance companies. There are some cases in which a rate will not change, but they require some stipulation in the original contract that allows for renewal at the same premium (and such stipulations are rare). Major health changes may also allow rates to stay the same or close to the same; if a renewing policy holder is still relatively young and has stopped smoking and lost weight, for instance, the change in his or her term life insurance quote might be negligible.
It's best not to count on these types of circumstances, and instead, do some research to see if a better term life insurance quote is available from the variety of insurers out there. Talk to your insurer and discuss ways to get your rate lowered, or consider other types of life insurance that offer more of a long term investment potential. Convertible term life insurance, for instance, might be a great idea--convertible plans can become whole life policies after a certain amount of time, and from that point they build value and allow you to draw out your premiums after retirement. In any case, read over your policy carefully before heading in for a renewal.
