How Simple Is Switching Life Insurance Companies?

life insurance

When most people secure a life insurance policy, they typically stick with the company for the duration of the term. While there are a number of reasons people usually don’t switch companies, one of the biggest is that there simply isn’t a need.

Unless customers hear bad news about the financial state of a company, or dislike a specific service, they typically don’t have enough interaction with their life insurer to desire policy cancellation. But if for some reason a policyholder does decide to switch insurance companies, how simple is the process?

Why Customers Stick with the Same Life Insurance Companies

Life insurance stands apart from the three other most common forms of insurance (auto, homeowners and health).

While auto, homeowners and health insurance actually provide recurring services to policyholders, life insurance policyholders usually don’t experience the benefits of coverage unless they purchase permanent life insurance.

In fact, some people choose not to purchase life insurance at all because they don’t see the advantages of coverage.

For many who do buy coverage, however, the idea of switching companies after purchase seems like a foreign concept. This is especially true for policyholders who had to take several steps to qualify for coverage, including completing a medical exam.

Of course, there could always a reason to want to change to a new insurance provider, whether you’ve received bad news about the insurer or you’ve heard great news about another company. If you do decide that moving on is right for you, how can you make a smooth transition?

How to Switch Insurance Companies with Ease

The good news is the transition shouldn’t be too difficult. While it’s not as effortless as jumping from one auto insurer to another, the process can flow smoothly by taking the right steps:

  • Switch while still young and healthy: Keep in mind that life insurance premiums are largely based on the policyholder’s age and health. The sooner you make the switch, the easier it will be for you to find an affordable policy with a new company based on your current health and age.
  • Make the switch count: If you’re making the effort to switch insurance companies, be sure that you find a policy that serves as a true upgrade. If you’re under a term policy, try to find a permanent (whole, variable or universal) policy with better benefits at a great cost. In other words, don’t simply make a lateral move. Make this switch worth the effort.
  • Don’t cancel your first policy too soon: Experts recommend not canceling your first policy until you’re sure the new policy has taken effect. The purpose of this coverage is to insure you every day you’re alive, so don’t mistakenly leave yourself uncovered by canceling too soon.

You could also consider communicating with your present life insurance company before going out and finding a new one. Many companies are willing to address your concerns by offering discounts on upgraded policies so that you can maintain coverage while benefiting from additional perks.

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