As a single parent of two small children, I ensured to purchase term life insurance not too long ago. Since they’ve gotten older, I frequently wonder if my the payout from my policy could be enough to assist purchase their living expenses and college costs if something were to occur to me.
Not having enough life insurance could be a real problem. But what about having an excessive amount of term life insurance coverage? Is that a thing?
The short response is yes. When it comes to the peace of mind life insurance can provide, you cant ever must a lot of that. But maybe you’ve been through an existence change because you bought the policy several years ago. You paid off your house, you've made some real traction on building wealth, or your child is officially a financially independent adult. In that case, you will probably find the term life policy you've might be more than you'll need.
Instead of canceling your policy or spending money on $1 million in term life insurance coverage when you just have $500,000, are you aware that many insurers will let you reduce your face amount?
Many insurers permit policy changes
Reducing the quantity of coverage you've is usually not really a problem. Many insurers enables you to make a switch to your policy at least one time throughout the life of the policy. At Haven Life, for instance, Haven Term policyholders can help to eliminate their policy amount at any time and multiple times (assuming it isn't less than our current policy the least $100,000). Keep in mind that increasing your coverage amount more often than not requires medical underwriting unless it's inside a certain timeframe of whenever you purchased the insurance policy. So, it's wise to ensure you really want to have less coverage throughout your term length.
If you're finding yourself in a situation where you think you've an excessive amount of coverage, take a moment to recalculate your life insurance needs if the recommendation is less than the present coverage you've. If so, speak to your life insurance company or agency and discover the logistics of reducing your coverage.
How reducing coverage will impact your premium pricing
The bigger your policy, the higher your premium. Dialing back your term life coverage will reduce your premiums because you have already kept in your rate class when you bought the insurance policy.
For example, if, as a very healthy 30-year-old woman, you purchased a 30-year, $1 million policy, your premium could be around $67 per month like a Haven Term policyholder. Twenty years later, at 50 years old, if you decided you actually only needed a $500,000 policy for the remaining Ten years of your term length, you would still pay the pricing for any 30-year-old at that face amount, that is about $37. That's $20 a month in savings for the next 10 years — or $2,400.
Life insurance, and term life particularly, can be bought for a coverage term intended to help financially protect your loved ones during the years they require it most — until your mortgage and other debts are repaid, the children are adults, and your spouse reaches or near retirement, for instance. It's likely that over the course of all those many life milestones that your coverage needs will change. You may need to buy more coverage sooner or later, or you will discover that you need to have less. If you're unsure, reach out to your life insurance provider and discover what your very best options may be to help keep you from being underinsured or overpaying for coverage.
