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Think twice before shifting from current life insurance policy
If you decide to replace or cancel your existing policy and
buy a new life insurance it may not be the intelligent decision for you as it
has some points that make it unwise decision.
In the early years of the policy you have to incur additional
expenses such as commission, administrative cost of producing and delivering
the policy and set up the new account on the computer this may reduce the cash
value of the policy.
The company can deny your claim in the first two years of the
policy if they can prove that you withheld some important facts at the time of
policy issuance which was necessary to know; this is known as the Contestable
period; if you change the policy you have to again go through the contestable
period.
If you change your current life insurance policy than you
have to pay higher premium as your age is more than you have bought the earlier
one; your current age plays an important role in deciding your premium.
If you have decided to drop or cash-in your current policy
and buy a new policy than you must take the following steps:
This is your responsibility to provide you the relevant facts
related to the shift of the policy; and it is your duty to go through the
material carefully which is provided to you by your agent or insurer.
You must go through the benefits and cash value of both
policies carefully; you must also make sure if there is any surrender charges
or not; you must also keep in mind if there is any tax implications or not.
Compare the features of both the policies; life insurance policies usually
have many options such as how dividend will used, how claims will be paid, how
loans and withdrawals are handled etc.
If you want to take the loan than compare the interest rates
for both the policies otherwise you will find yourself paying up more interest.
See that your existing policy and/or proposed policy are
participating if a policy is participating than a policy holder may receive the
dividend; though the company cannot guarantee that how much dividend it will
give in future.
Compare the present and future costs of both policies as term
policies may have higher renewal cost depending on the provisions of the
policies.
Do not drop or change your existing policy unless you are
able to understand all the aspects of the policies.
Source: http://bloglifeinsurance.tumblr.com/post/143937634958/think-twice-before-shifting-from-current-life
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