Switching Between Life Insurance Policies

Posted in Life Insurance

February 11th, 2009

Life insurance has been part of your annual expenses since your first child was born. Along the way, you often consider switching between life insurance policies, as sometimes you see advertisements touting extremely low promotional rates. It may be tempting to switch your life insurance plan every few years to take advantage of the variety of discounts out there. However, it can also be dangerous to switch between insurance policies simply because you are chasing better premiums.

Every time a consumer signs on for life insurance, there is a contestability period. During that time, if your death is deemed as a suicide or if is discovered that you were not completely honest about your health conditions, the payout to your beneficiary may be contested. In some cases, the insurance providers may deny the claim altogether, and that could leave your beneficiaries with nothing. Many life insurance providers know that people often switch their policies to take advantage of a lower premium. If you do that too often, life insurance companies may deny you coverage altogether.

If however, you feel your old life insurance policy no longer meets your requirements, there are some steps to help make the transition to a new policy go more smoothly. Make sure to investigate your options thoroughly, compare the rates, and do not cancel your existing policy until you are guaranteed that the new policy has taken affect.