If your children are now grown and living independently you might need less coverage than you did when they were still in school. Image: Tupungato/Shutterstock.com
By: FEDweek StaffIf you still have a life insurance policy you bought more than 10 years ago, you may be paying too much for the coverage.
Therefore, it might make sense to replace your old life insurance policy with a new one.
That’s especially true if you’re in good health for your age; you might be able to get equivalent coverage at a much lower price.
Step One is to review your current need for life insurance. If your children are now grown and living independently, for example, you might need less coverage than you did when they were still in school.
Alternatively, you might need more coverage if your existing insurance would be inadequate to maintain your family’s lifestyle.
Step Two is to decide what type of life insurance you need.
Term insurance provides coverage for a specified number of years at less cost, but if you’re not sure your need for life insurance will ever expire, a more expensive permanent life policy might be a better choice.
This coverage is known as “whole life,” “universal life,” or “variable life” insurance.
Once you make these decisions, shop the market and get the best deal; working with an experienced agent may well be worth their fee.
Don’t cancel your old policy until the new one is in effect.
If you’ll owe income tax on a policy cancellation, ask your agent to arrange a tax-free exchange from your old policy to the new one.
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