It’s true. You could actually save money when switching life insurance policies – provided you play your cards right!
Life insurance serves as a financial safety net to secure your loved ones’ future after you’re gone. You could either opt for a term life policy (coverage for a fixed number of years) or a permanent life policy (coverage for the insured’s entire lifetime).
A majority of term life policies are convertible. You may choose to switch your policy for a number of reasons; your coverage may have ended, your financial needs have changed, you may not be able to afford the premiums any longer, etc.
Whatever the reason, policyholders may stand to save a fortune when switching policies, so long as they keep an eye out for upfront fees, tax consequences, and the likes.
Below, we cover 4 ways you could potentially save money when switching life insurance plans.
Let’s take a look!
1. You Can Enjoy Lower Premiums
You may find that your life situation has changed since you first took out your life insurance policy. Perhaps, you aren’t comfortable paying as much as you do in premiums or your spouse and children are no longer reliant on you for financial support.
Whatever the case, downgrading your term insurance plan may be the best option for you right now as your responsibilities have changed. You could opt for an affordable policy that offers the benefits you require without splurging on the excess!
Remember, you could also convert just a portion of your term policy to a whole life policy. That way, your term life premiums will reduce and you’d also be paying less on a whole life policy!
2. You Can Access a Cash Value Asset
Think back to when you first took out a life policy. Did you opt for term life just because that involved lower premiums? Well, if your job situation has changed since and you’re making more money, a permanent life policy may be a great idea.
One of the most attractive factors of a permanent life policy is that a portion of your premium goes towards the insurance expense and a portion of it goes towards accumulating cash value!
Term life offers no cash value insurance. With a whole life plan, policyholders can withdraw from their cash value insurance in a tax-free manner. You may choose to do this for your retirement (or for any other reason) or even take out a loan against your whole life policy.
3. You Can Save If Your Health Changes
When you make the switch from a term policy to a whole life policy, you could extend your coverage while completely skipping the underwriting process.
This is an especially good idea if your health has taken a turn for the worse. Extending your term policy could mean exorbitant premiums. You may even be denied coverage altogether. But when you convert to a whole life policy, your current health status will not impact your premium or insurability.
4. Your Heirs Can Save on Estate Taxes
If you own property, the last thing you would want is to burden your beneficiaries with estate taxes. A whole life insurance policy could protect the full value of your estate from federal and state tax repercussions after your demise. Your heirs will enjoy immense relief knowing that they’ve dodged what would otherwise have been a huge financial stressor.
Additionally, a whole life policy will ensure that your heirs aren’t compelled to sell the estate upon your demise, which would be an especially emotional affair if the property has sentimental value and has been in the family for generations.
And with that, we’ve reached the end of our journey!
These 4 benefits could make for a very compelling reason to convert your policy as soon as possible. However, we do want to caution you against any premature decisions.
Take the time to review your current lifestyle, financial goals, health status, and the tax repercussions and fees associated with switching policies. Remember, a little planning goes a long way.
We wish you the very best!
[offerpromo]
