Getting a life insurance policy is a huge financial decision. Customers usually consider all their financial obligations and requirements before purchasing a life insurance policy. Even though a customer purchases the perfect policy for themself, there is a probability that their financial requirements might change in the future and they wish to replace the policy with a new one.
If you ever find yourself in this scenario, follow the steps below to replace your policy with a better one.
- Evaluation of your Current Policy: Examine the benefits, coverage amount, premiums, and policy terms. Make sure to understand the surrender charges for terminating the policy early. Also, evaluate why you no longer require your current policy.
- Research: After evaluating your current policy, it's now time to research your new policy. Compare as many options as possible and look for policies that offer better terms, lower premiums, and more suitable coverage.
- Application for a new policy: Apply for a new policy and it may include providing personal information and undergoing medical exams for the whole underwriting process. After your policy is approved, review the policy details and whether it meets your expectations.
- Policy Comparison: After you receive your new policy, compare it with the existing one to ensure that you have made the right decision. You can even consult a financial advisor for this stage. Evaluate all the costs including the surrender costs from the old policy to the new one.
- Policy Replacement Notice: Make sure to insure your existing insurer of your intent to replace the policy.
- Secure New Poicy: Just to avoid the coverage gap, it is recommended to secure temporary coverage during the transition period. Some insurance companies offer temporary insurance agreements. Also, ensure that the new policy is fully effective before canceling the old policy. This means that the policy documents should be with you and you should have paid the first premium.
- Cancellation of the Old Policy: Once the new policy is in effect, cancel the old policy by sending a formal request to your insurer. Verify that the old policy is canceled and all the refunds are made.
So, these are some of the steps you should take while replacing your old life insurance policy with a new one.
