UPDATED: Feb 25, 2020
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Do you have a term life insurance policy already in place? Are you doing everything you can to get the lowest price on the existing policy? If not, you may be able to lower the cost if you know where to look and what to do. Let’s take a look at some steps you can take to try and reduce your term life insurance policy premiums.
1. Refresh your memory of the rating class that was assigned to your policy.
The rating class is usually listed within the first few pages of the policy. Common rating classes include Preferred Plus, Preferred, Standard Plus and Standard. The very best rating class goes by several different names, such as Preferred Plus, Super Preferred, Preferred Best or Elite Plus. The very best rating class carries the lowest possible premium payments. If you do not already have the very best rating class, there may be room for improvement!
2. Contact your agent or life insurance company to see if they allow reconsideration on existing term life insurance policies.
Many life insurance companies allow existing policy holders to apply for improvement on the rating class, but not all. This option is almost never guaranteed in the policy and is subject to change any time a life insurance company decides to change their rules. The companies that allow reconsiderations typically require a simple form requesting the rating class to be reviewed. Sometimes new lab tests or medical records are required to prove the insuredâ€™s health status has improved.
3. Discuss your current situation and options with your agent.
Knowing the reasons for your existing rating class will help your agent determine if you are a good candidate to try for reconsideration.
For example, imagine you have an existing term life insurance policy with a Standard rating class. The policy was issued five years ago, and the reason for the Standard rating class was elevated cholesterol levels. You’ve since improved your diet and lifestyle, and your cholesterol is now under control. You would be an excellent candidate for reconsideration, provided your cholesterol levels have been controlled for a period (usually six months to one year), and there is documented evidence through medical records showing the improvement.
Other good candidates are people whose less-than-perfect ratings were caused by:
- Tobacco Use – Inquire about having the tobacco rating removed after it has been at least a year since your last use of any tobacco/nicotine products.
- Lab Test Abnormalities – Abnormalities such as elevated liver enzymes may normalize with the help of your doctor. Ask for reconsideration when they are back to normal.
- Medical Impairments – People with one of the several types of medical impairments such as depression and diabetes can try for reconsideration if the condition has improved.
- Driving Record – Did you have a few too many speeding tickets when you purchased your term life insurance policy? Try for reconsideration when the last 3-5 years of your driving record is clean.
4. Don’t fret if you can’t improve the rating class on your existing term life insurance policy. You have options!
Suppose your existing rating class was based on something you have no control of, such as family medical history. Or perhaps you already have the best rating class available. You may still be able to save some money!
- Switch your payment mode to annual. Annual is the cheapest payment mode. Most life insurance companies charge an extra 3-5% for the convenience of paying semi-annual, quarterly or monthly.
- Talk to your agent about the many different life insurance companies and their underwriting guidelines. Companies evolve and change their guidelines periodically. As a result, there may now be a company more suited to your particular situation. Your agent can help you find that company.
- Compare your existing policy premium with premiums for a new policy. If you already have the best rating class on a relatively new term life insurance policy, check new quotes to see how current rates compare to your existing rates. The premium rates for your age group and risk category may have gone down since you purchased your policy.
Contact your existing agent or another trusted source to discuss your term life insurance policy and get started on the road to savings!