Can I add or remove my life insurance in the middle of my policy ?
Total Comments: 12
Posted: Mon Dec 14, 2009 06:22 am Post Subject:
dgoldenz is correct in that the life insurance provided in a policy can, in almost every case, be reduced. This is often done when premiums are no longer sufficient to support the policy (usually occurs in later years) or a policy is no longer affordable.
The coverage, however, cannot be increased as easily. This sometimes requires a new policy and, in almost every case (a Guaranteed Insurability Rider is one exception) underwriting must be completed for the larger amount.
Posted: Mon Dec 14, 2009 10:16 pm Post Subject:
The type of policy and contract language within will usually describe what privileges the owner has with regard to changing the insurance amounts and/or terminating riders. Universal life will allow face amount decreases, in increments stated in the policy but not below a minimum value (which could already be the policy face amount), usually without underwriting, but increases are another matter.
Increases in face amount, even in universal life, will always require new underwriting (not necessarily a medical exam) in the absence of a "guaranteed" purchase option of some sort. Nonguaranteed increases in face amount will normally be accompanied by increases in the premiums at the insured's current age (age last, age nearest). But if you cannot qualify for an increase, no matter how much you might be willing to pay, you cannot force the company to give it to you.
Another way to lower the death benefit in some policies is to take a "withdrawal" of cash value instead of a "policy loan". In such cases, each $1 of cash value withdrawn = $1 (sometime more) of death benefit reduction. The policy may require withdrawals in certain minimum amounts, such as $100, $500, or $1,000.
Posted: Mon Dec 14, 2009 06:22 am Post Subject:
dgoldenz is correct in that the life insurance provided in a policy can, in almost every case, be reduced. This is often done when premiums are no longer sufficient to support the policy (usually occurs in later years) or a policy is no longer affordable.
The coverage, however, cannot be increased as easily. This sometimes requires a new policy and, in almost every case (a Guaranteed Insurability Rider is one exception) underwriting must be completed for the larger amount.
Posted: Mon Dec 14, 2009 10:16 pm Post Subject:
The type of policy and contract language within will usually describe what privileges the owner has with regard to changing the insurance amounts and/or terminating riders. Universal life will allow face amount decreases, in increments stated in the policy but not below a minimum value (which could already be the policy face amount), usually without underwriting, but increases are another matter.
Increases in face amount, even in universal life, will always require new underwriting (not necessarily a medical exam) in the absence of a "guaranteed" purchase option of some sort. Nonguaranteed increases in face amount will normally be accompanied by increases in the premiums at the insured's current age (age last, age nearest). But if you cannot qualify for an increase, no matter how much you might be willing to pay, you cannot force the company to give it to you.
Another way to lower the death benefit in some policies is to take a "withdrawal" of cash value instead of a "policy loan". In such cases, each $1 of cash value withdrawn = $1 (sometime more) of death benefit reduction. The policy may require withdrawals in certain minimum amounts, such as $100, $500, or $1,000.
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