What to think about before dropping a life insurance policy – InsuranceNewsNet
Ownership of life insurance has declined over the past decade. According to a January 2022 LIMRA study, only 50% of consumers had life insurance. This percentage was down from 59% in 2012. Life insurance owners may be tempted to drop their current policy if they feel it is too expensive or no longer needed.
Fortunately, there are alternatives, such as purchasing life insurance without a medical exam, that can allow buyers to continue purchasing a policy. Here are four questions life insurance owners should ask themselves before giving up their life insurance.
1. Would the policyholder’s life insurance policy provide its beneficiaries with the support they need?
An insured who gets rid of his life insurance policy would mean that his beneficiaries could lose the support they need if the insured were to pass away. In particular, if the insured is the main wage earner, with the loss of income, the family will find it difficult to pay for daily expenses such as gas and groceries. An investigation found that families began to struggle within six months of the death of the main wage earner. Therefore, the owner of life insurance must carefully consider whether his family would still need the death benefit from his policy if he were to die.
2. Is there a more affordable coverage option?
Given the ever-changing financial circumstances, some life insurance owners may wonder if their policy is too expensive to continue owning. Instead of giving up the policy, life insurance owners can look around to see if there is a more affordable option. Some providers will allow a policyholder to convert their current policy to a different type. For example, a life insurance owner may decide that a whole life insurance policy is no longer affordable to them and choose to convert the policy to a less expensive term life insurance policy.
3. Is the insured’s family at risk of losing their house or car?
Some life insurance owners choose to obtain a life insurance policy to cover a debt, such as a car loan or mortgage. Life insurance owners may feel like they’ve paid off enough of their debt that they no longer need a policy. Instead of getting rid of the policy, an alternative that could be considered is to reduce the amount of coverage. For example, let’s say an individual is currently 20 years into a 30 year mortgage. A policyholder could reduce their coverage amount to the amount remaining to be paid. Reducing the amount of coverage also reduces the cost of coverage, making it more affordable.
4. Will the final costs of the insured be covered?
Some policyholders may be at the point where their children are financially independent and all of their debts are paid off. Although life insurance is no longer required to cover these expenses, it may be required to cover final expenses. Without a policy, funeral costs can weigh financially on surviving family members. If a policyholder’s current policy is no longer needed, they might consider converting it to a final expense insurance policy. One of the advantages of this policy is that it generally does not require a medical examination. Final expense insurance can help cover funeral and end-of-life costs and allow a family to focus on bereavement. Careful consideration of these questions can help life insurance owners make a better decision about what to do with their policy.
Answering the questions in this article is the first step to ensuring you get an insurance policy that meets your needs. Of course, after really thinking about life insurance and how it can help your family, you probably have a few questions. With the rest of the questions, Fidelity Life can guide you through the process.
Fidelity Life does not offer medical life insurance. Life insurance buyers can discuss their options with an agent or buy life insurance quotes online. The process is quick and easy and starts with answering a few questions to get a font that meets their needs. Fidelity Life will then guide the applicant through the application and purchase process.
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