The Importance of Reviewing Your Existing Coverage
You purchased life insurance. Now what? Most people buy life insurance and forget about it. In reality your existing life insurance coverage and needs should be reviewed at least every two years to ensure that your coverage goals are being met. Many factors need to be considered so it makes sense to work with an agent who is going to monitor your needs and coverage over time and not just disappear after the sale is made. Here’s how we helped a new client whose needs changed over time and the importance of a policy review.
The Client
The client, age 48, had $1,500,000 of term insurance (2 policies) and $100,000 of whole life coverage (1 policy) that she purchased years ago from another agent. She asked us to review her term and permanent coverage. After reviewing her term coverage, we decided that there was no need to make any changes. The client expressed that she wanted more permanent coverage but did not want to add another policy to the three existing policies she already had. She essentially wanted to find a way to leverage her whole life policy so that she had more permanent coverage while keeping her new premiums in line with what she was currently paying, $887 annually. She had built up just over $18,000 in cash value in her whole life policy that we could use to fund a new policy through a 1035 exchange.
The Solution
We were able to find her a guaranteed universal life policy that offered a guaranteed death benefit of $286,000 to age 100. Her premiums went from $887 annually to $900 annually, an increase of only $13. Her new policy also allows her to get back all of her premiums, including the cash value she used from her old policy, at various yearly increments. So if her needs ever change and she wants to cash out and take her premiums back, she can do so in the future.
The client was happy because we were able to get her roughly 3 times the coverage for almost the same premium. She was also happy to know that she could get her premiums back in later years if she decided that she no longer wanted or needed the coverage.
What to Consider Before Replacing Your Old Policy
If you decide to replace old coverage for new coverage, you should never cancel your old policy until your new policy is in effect. You should also note that a new 2 year contestability period will kick in if you choose to get new coverage. This means that the life insurance company can investigate your claim if you pass away within 2 years of owning the policy and they suspect any misrepresentation or falsified information.
Conclusion
It is important to review your life insurance needs regularly so that you be assured that you are on track to meet your goals. In this case, the client wanted more permanent coverage without adding an additional policy or substantially increasing her premiums. The solution made sense since we were able to meet all of her objectives. You should only consider replacement if it truly meets your new objectives and goals. Do you want an objective review of your current insurance needs or coverage? We would be happy to provide a free, no obligation assessment of your current coverage and offer any alternatives that might improve your current situation. We have access to over 40 insurance companies and will use all of our resources to get you the best coverage option available. Please feel free to give us a call at (888) 687-9444 or email us at info@archstoneagency.com if you have any questions.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com. You can also visit our website at www.archstoneinsurance.com.
