Should I Change/Switch My Life Insurance Policy?

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As your life changes so will the things you spend money on. As you start a family you suddenly have to pay for childcare expenses. When you purchase a home you now have mortgage payments to make. One of the things you might have to start or stop paying for depending on how your life changes in your life insurance.  We will discuss the kinds of situations where it may be prudent to change or switch your life insurance policy, and some tips that might help you out.

Why Change?

There are a lot of reasons why you may want or need to change your life insurance policy. The most common examples include:

  • You have experienced significant changes in your life. some examples might include having children who now depend on your income for their livelihood. Another example includes taken out additional loans for whatever reason making a difference in terms of what you can afford to pay for.
  • You purchase a new home .
  • You have changed your  mortgage repayments or you are in arrears. Under these circumstances, you may want to contact your insurance provider as quickly as you can to inform them of any changes in your mortgage repayments, and see if this will negatively affect on your policy.
  • You let your original insurance policy lapse.

Tips for Changing Your Life Insurance

  • Get proper financial advice concerning the change.
  • Only cancel existing policies to get a new one if you have a genuinely good reason for doing so.
  • Do some research so that you can ask your provider all the right questions.
  • Always give full and accurate information when completing application forms.
  • Read your policy details to check what you are covered for and what your policy excludes. Policies often have exclusions or restrictions, as well as terms and conditions you must meet to make your claim

What If I Want to Switch Policies But Keep the Same Insurance Provider?

Switching your insurance policy can be simple, but it depends on your situation. If you have a mortgage lender and they are not the ones assigned to pay off your mortgage in the event that you die then the process of switching should be a relatively straightforward one. However, if your mortgage lender is the one assigned with paying off your mortgage when you die then there are a few things you will need to do. The are:

  1. Contact you lender to make them aware of your intentions to switch life insurance policies.
  2. Agree on a new policy with your current lender. Your current lender first has to accept the new proposal before the can cancel the original policy. Canceling the old policy is a necessary part of switching to a new one, but you should only do so once you have confirmed the fact that the new policy has been put in place.
  3. Ensure that the legal obligation to pay off your mortgage in the event of your death is assigned to your current lender as a part of the new policy.