What To Do If Your Life Insurance Policy Has Expired
There are many benefits of holding a term policy
. One of the most obvious is that a low term life insurance rate means that your family gets better coverage per dollar spent, and that it's a low-maintenance plan during its duration. However, that policy will eventually expire, and you will have to renegotiate the terms of the policy in order to continue it. During the time between the expiration of the last policy and the negotiation of the new one, you will be unprotected. To ensure that protection continues, you need to be proactive.
Why Your Current Policy Expires
Because your term life insurance rate is based upon your health, virtually all policies will require that you have a thorough medical exam and that your medical history is considered in full before they will confirm your new policy. For this reason, unless you keep careful track of your policy and apply for a new quote long before your old one expires, there will be an interim period. Your old coverage will end, and then you will apply for a new term life insurance rate. While you are waiting the four to six weeks for final approval after undergoing the medical examination, you will be completely unprotected.
Your Best Alternative: Be Proactive About Your New Term Life Insurance Rate
Considering why your coverage can lapse, you'll see that you can have uninterrupted coverage by knowing when your current policy will end and planning accordingly. If you can get your new life insurance rate before your old one expires, then you can transition to your new term policy with no problems. However, many policy owners find it difficult to keep such careful track of something with as long a duration as term coverage.
There is one way to make it easier. With the advent of online term life insurance rate providers, financial planners now advocate examining your coverage on a yearly basis to see if there are more economical options. Although it may seem counterintuitive, it is actually possible for your same policy to become less expensive for your age group. The life expectancy is rising for Americans, and you benefit from that phenomenon. In effect, as the age rises, your age becomes less of a high risk factor. But unless you check frequently to determine whether your policy is the best offered or not, you won't know. The company certainly won't offer to reduce your term life insurance rate without your prompting.
Most financial planners recommend that you check online every year or two. That means you're taking a more active role in monitoring your policy, which means you're more likely to know when it's going to expire. If you can simply keep an eye on the expiration date, you can plan ahead so that you get your new term life insurance rate before the old one expires, eliminating the gap period entirely.
If You Can't Avoid The Gap, You're Not Out Of Options
There are two main alternatives if you cannot obtain a new term life insurance rate before your old coverage expires. The first is to simply get guaranteed coverage, which does not require any kind of health exam. You can get coverage instantly, but it tends to be somewhat more expensive than your regular term life insurance rate. Guaranteed coverage can also be a permanent coverage option for individuals who are higher risk. Examine your particular plan in detail and check with a broker before making any decisions.
The second option is to choose a term life insurance rate that includes a binding coverage option. In order to apply for binding coverage, you must submit a TIA form with your application for coverage. Once that form is received, you are automatically covered until your application can be processed. All you need do is submit your first month's premium with the application. If you ultimately cannot qualify for that term life insurance rate, you'll be refunded in full. If this is the case, your coverage during that interim period is revoked retroactively.
A Good Broker Can Help You
All decisions about policies and rates should be made with the assistance of a broker. Purchasing this type of policy is a big decision, and the legal language can be complex and difficult to understand otherwise. The suggestions in this article should be discussed with your broker before you take any action. What you should do is ultimately determined by your unique situation, and only your broker knows the details of your current plan.
SEEK INDEPENDENT ADVICE. All information expressed in this article is intended to be general information only. You should not rely upon this general information to make legal, tax, investment, estate or financial planning decisions. No portion of this article is intended to nor does it provide legal, tax, investment, estate or financial planning advice. For this type of advice, you must consult an independent advisor.
What To Do If Your Life Insurance Policy Has Expired
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