Now Is The Time To Review Your Life Insurance Policy

Life insurance is becoming more and more affordable because people are simply living longer. Life insurance premiums are based on one's life expectancy. Naturally, as the average age of our population increases, life insurance premiums will decrease. Most companies review their mortality tables every few years and with these reviews come lower premiums.

Term Insurance

Term insurance rates are the most effected by mortality rates. For example, you bought a 20 year level term policy 6 years ago and you're paying $1,000 annually. The same policy now might only cost $800 annually. Yes, you're 6 years older now but if you're health has remained the same or improved then you might be able to purchase a new policy for less than the $1,000 you currently pay; added bonus, you will extend the term for an extra 6 years.

It will not cost you anything to apply for the insurance so you literally have nothing to lose. Worst case scenario is your health has changed or the premiums are more expensive. In this case, simply decline the coverage and keep the current policy.

Whole Life Insurance

When purchasing whole life insurance, premium should not be the only factor to consider. You should also consider the financial strength of the company and if the insurer is a mutual company or a stock company. That said, mortality does play a roll. Just as in term insurance, there is a mortality component calculated in whole life insurance premiums. The lower the mortality rate, the better internal rate of return the policy will provide, this means higher cash values for you. If a review proves that your whole life insurance policy isn't performing as it should, you do have options. I'm not a proponent of replacing insurance policies just for the sake of replacing them but if there is a significant economic reason to do so I will recommend it. The IRS allows us to transfer cash value from one life insurance policy to another by way of a 1035 exchange. The 1035 exchange allows the money to be moved to a similar vehicle without taxes or penalties.

Please see an experienced insurance professional before making such a change.

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