The Case For Trading In Your Life Insurance Policy For A Better One.


This information is intended for responsible life insurance owners who have responsibly purchased all the life insurance they want or need. The focus of this article emphasizes the wisdom of getting better coverage than what you have now and the justification behind it.

This article IS NOT another one targeting smart insurance consumers about why they should own life insurance. They already do.

For the uninsured people with families and/or businesses that are unprotected, the first several hundred pages of google results about owning life insurance are filled with articles that you may find useful.

If you have existing life insurance coverage, here is the good news…

As life insurance awareness month is approaching this September (yes, there is such a thing), I feel compelled to address an issue that is negatively affecting millions of life insurance policyholders. As an industry, we are negligent in delivering the information policyholders need to know. There continues to be inadequate messaging from our industry about just how beneficial it can be to upgrade inforce policies. There are many reasons why consistent and positive messaging from all stakeholders is beneficial to inforce policyholders. Undoubtedly, positive messaging would help reinforce the wisdom in exploring better policies. I am not suggesting everyone run out and replace their life insurance policies. I am suggesting we do away with the negativity around the consideration of upgrading inforce coverage.

Life insurance is not a “one and done” acquisition and owners of life insurance NEED TO KNOW THIS. Somehow, over the past 30 years, the words “switching” or “replacing” have become “dirty words” within the life insurance industry. There was a time when unscrupulous agents churned business, but those days are long gone. The industry did a nice job of policing itself and replacement rules were established. I would argue that the pendulum has swung too far considering that some life insurance applications include replacement paperwork with dozens of pages that are impossible to complete. To be clear, I am 100% for consumer-oriented replacement guidelines.

Would you shop a mortgage rate if a better one seemed possible? Would you get a better car if the cost was comparable? Most people will answer yes but it depends on the analysis and the details. The same applies to life insurance policies.

Innovation is the force behind better life insurance products.

People with existing life insurance deserve to hear from the entire industry with consistent messaging that replacing, changing or switching one policy for another may be a smart thing to consider. It is simply not good enough for agents to be solely responsible for creating this awareness. Insurance consumers must get consistent messaging from insurance companies, agents, associations, industry pundits and advocates. It is imprudent to keep a life insurance policy without knowing if better coverage is available. There is plenty of good review methodology for life insurance professionals to use when laying out the case for either keeping a policy, or for making a change. It all begins with good health. The fortunate people are in similar health or better health from the time of their last purchase. They will find there are tremendous innovations to consider. Jumbo policies should routinely be reviewed as there are several insurance companies competing for this business.

The fact is, these innovations are occurring frequently in the life and annuity industries, and they are especially benefitting permanent life insurance products. We tend to think that because we are older, we have no sensible options for trading up. But that is not the case. The key to enhancing your coverage is health. With that said, you cannot take advantage of any innovation without trading up. For example, life insurance policies allow you to take an advance from the face amount of your policy when you have a critical or chronic illness. This isn’t the case with most people’s current policies. Quite frankly, accelerated benefits alone make a strong case for trading up. The advance comes from the face amount of the new policy, not the cash value account. There may be zero cash in the policy, but that does not matter. Term insurance policies never build up cash value and yet there are some term policies with living benefits and accelerated benefit options. This is just one example of a recent innovation that could warrant a replacement.

There is no valid argument against taking advantage of better rates, lower premiums, more benefits and more flexibility.

Are there sensible arguments against changing one life insurance policy for another? Yes, there are many possible reasons for not switching, changing or replacing policies. It makes sense to be prudent about change. Insurance agents who sold the policies may be defensive and they may not want their clients working with other professionals to find better policies. But there are no valid arguments against taking advantage of better rates, lower premiums, more benefits and more flexibility. Use a life insurance professional you trust to lay out the potential pros and cons.

When does it make sense to keep existing coverage? Some people have had a significant change in health or there may be surrender charges levied against a policy. Until a policy or policies have been properly reviewed, it is impossible to know.

If your health is equal to or better than the last policy you bought, it is likely that you can upgrade. Buying life insurance today is much simpler and depending on the amount of coverage, it can all be done online without a medical exam.

Please contact us at 561-771-4647 or use the form on this page. I offer a complimentary consultation to discuss anything you wish about life insurance or annuities. I am proud of the things many clients have chosen to say about us and perhaps they will give you additional insight about how we do business.
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Ted Bernstein

Dedicated to helping people create the ultimate retirement security and protection plan to safeguard their families and businesses. I stress guaranteed income solutions, indexed annuities and state of the art wealth preservation strategies. As the innovator of life insurance products without commissions, my recommendations are impartial, objective and always in the best interests of my clients.