Replacing a life insurance policy used to be unthinkable but now you should investigate the possibility. With Americans’ life expectancy on the increase, insurance companies are lowering the premiums they charge. Therefore, if you have a life insurance policy issued as recently as three years ago, you should ask for an “in-force illustration.” Ask for those illustrations to be run using realistic assumptions, such as current mortality rates and guaranteed rates of return as low as 4 percent.
Then compare the results to new policies that are available, perhaps from the same company. Often you’ll find that you can cut premiums by 25 percent or more, or you can achieve a 33 percent increase in death benefits for the same premium, by taking out a new policy.
In some cases, individuals who have minor medical conditions previously would have had to pay higher premiums. Now, those same individuals might be given the opportunity to buy insurance at the lower rates. Therefore, you might be able to get better value on life insurance today, reflecting increased life expectancy.
