Posted on: 22nd Jul 2019
The reason a diverse number of insurance policies exist is simply that different policies attend to the varying needs of the people who purchase them. Your personal reason for purchasing a particular life insurance policy may be closely related but still quite different from why the next man or woman would want to purchase one for themselves. In the same vein, when people decide to replace their insurance policies, they usually have different reasons for doing so as well.
In this article, we’re going to explore four (4) reasons why people often decide to replace their life insurance policies. We have established that people basically do things for their own unique and personal reasons. However, what we want to achieve with this article is to highlight and discuss just a few of the popular/common reasons why people usually change or replace their policies. In doing so, our aim is also to get you informed concerning policy replacement. As we point out instances, circumstances or reasons why people replace their insurance policies, we believe that this information will be beneficial to you so that you too would be able to identify when you can replace, update or change yours.
That being said, here are four (4) common reasons why people typically replace their life insurance policies. They include;
This has to be one of the first and foremost reasons why people replace their life insurance policies. It’s a no-brainer. If something as valuable as life insurance expires, the natural thing to do would be to either renew it when its validity runs out or replace it.
If you desire a replacement coverage perhaps because your needs have changed. Then take your time and pick up a policy that best suits your needs. This may take a short time or it may take a while, nonetheless, we advise that you do not stay without life insurance for too long especially when you have dependents. If for some reason replacing your life insurance policy with one that is perfect for your current needs is going to take a while, we suggest that you subscribe to a small policy preferably one with “no exam” needed just to be in the clear.
Another reason people often seek to replace their life insurance policies is due to a change in their financial status. Note that this particular reason goes both ways as a change in finances can either be for the better or the opposite.
For someone who’s experiencing a drop in finances so much that he or she is not able to keep up with his or her current premiums (too expensive at the moment), they may decide to replace their policy with a much cheaper one. If the policy has conversion riders that allow it to switch easily to another policy that’ll be splendid. However, if this is not the case, one may need to terminate and re-subscribe.
On the other hand, for someone who is retiring or retired and is blessed with grown-up kids and lesser financial responsibilities, he or she may decide to replace their policies for one that helps them build up assets or create estates/trusts.
People start to get uncomfortable when their current life insurance policy does not give them sufficient coverage and who wouldn’t!?! If your policy can no longer cater to all your needs, then you might want to replace it. Typically, life insurance policies usually have provision for supplemental coverage.
This means that you can most likely get additional coverage to attend to your needs. If your policy is that of a term life insurance, getting one or more additional term life insurance policies works just fine. It’s called “layering”. Note that this also works for permanent life insurance policies. The crucial thing to note here is when expanding your policy like this, remember to meticulously take into account your needs that may arise in a not so distant time from now.
Lastly, a major reason why people replace their life insurance policies is due to new developments in their life. If your lifestyle switches up, it is only logical to switch up your insurance policy by replacing it with a policy that best complements your current life situation.
These new life developments can be anything from having a new baby or more to a new promotion or even just getting married. These unique circumstances automatically change your lifestyle and of course, your policy needs. Therefore, finding a replacement that suits you only makes sense.
People would replace their life insurance policies when they have a reason to. These reasons vary as we can see and the need to replace your life Insurance policy may come up more often than you’d think. It’s best to get ready and start thinking ahead so that you’re not left unprepared for what the future holds.
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