The administrative burden of switching providers, whether it's for a bank account, a mobile phone provider, or utilities such as gas and electricity, is something that few of us look forward to doing.
However, it may be less difficult than you think to make changes to your life insurance policy. Doing so may prove to be helpful in the long term. If you're debating whether or not to transfer your life insurance policy but aren't sure, check out our professional guide.
How can I make a modification to my life insurance policy?
There are various options available to you if you need to raise the amount of life insurance. You may be able to make changes to your life insurance policy via your existing provider. You might get extra life insurance to supplement your current coverage.
Alternatively, you might cancel your insurance and look for a new policy that better meets your requirements.
Many life insurance carriers will allow you to amend the conditions of your policy after you've already purchased it. However, not all of them will. To find out if your insurance policy may be altered, read your policy paperwork or contact your insurer directly.
If you enjoy your existing insurance provider, you may want to consider amending your policy. However, bear in mind that there may be better prices available for you elsewhere.
When do I have to make a modification to my life insurance policy?
Whenever the circumstances of your life change, your life insurance policy should be updated to reflect those changes. When you buy life insurance, the kind of policy you choose will be based on your financial condition at the time of purchase.
However, since these policies are designed to endure for a long period of time, your financial situation is likely to change over time. If you don't maintain your insurance coverage up to date, you may find that the protection you have is inadequate.
If you relocate or refinance
If you relocate or refinance, it's possible that you'll be using your life insurance to pay off your mortgage. However, if you move into a larger house or refinance your mortgage, your debt is sure to increase.
By raising the amount of coverage you have in place, you can ensure that your family will not be burdened.
If you pay off your mortgage more quickly than planned, you may be able to reduce the value of your insurance and lower your premiums as a result.
If your family expands
More children and grandkids imply more dependents - individuals who will need to be cared for if you die. Changing your life insurance policy ensures that your whole family is insured, and there is no monetary value to peace of mind.
Value of your property increases
If the value of your property increases, your dependents will be liable for inheritance tax. You may get life insurance to pay property taxes if you own a home and the value of your home is growing.
This allows your loved ones to continue living in the home after you pass away. This is one instance in which trust might be beneficial.
How frequently should I review and update my life insurance policy?
Every 12 months, many financial experts may recommend that you go through the conditions of your life insurance policy. In the end, it all comes down to your individual circumstances.
For example, if you haven't relocated, welcomed any new children or grandkids, or seen a change in your salary in the recent year, you are unlikely to need to renew your life insurance.
However, in such instances, it's a good idea to take a brief look at your finances. This helps to determine if your life insurance is still providing enough protection for your loved ones.
What is the procedure for changing the beneficiary on my life insurance policy?
If you've recently divorced, you may no longer want your life insurance proceeds to be distributed to your former spouse. It's a good thing that most life insurance companies will let you alter the beneficiary on your policy.
To alter your beneficiary, all you have to do is contact your insurance company. In most cases, they'll give you an "additional beneficiary" form to complete. There's some paperwork involved, but your insurer should be able to provide assistance.
Once it has been completed and accepted by your insurer, your life insurance policy may be changed.
There are a few exceptions to this rule that should be considered. Beneficiaries may be deemed 'irrecoverable,' which means that you will not be able to amend the policy unless they give you written authorization.
Consider your options carefully before naming an irrecoverable beneficiary. There's always the possibility that your connection with your loved ones may alter in the future.
If your life insurance has been put in a trust, you should exercise caution when making changes to the beneficiary designation. Individuals sometimes set up trusts in order to avoid having to pay inheritance tax on the lump amount.
However, if you change your beneficiary, the money may be subject to tax if you die within seven years.
Is it possible to extend the duration of my life insurance policy?
You may request additional modifications to your policy, such as the term of your life insurance policy. For example, if you've just purchased a home or re-mortgaged, you may want to consider increasing the length of your life insurance policy.
Keep in mind that any changes may have an impact on the premiums that you pay. Your insurer would have to evaluate any adjustment request depending on your current circumstances.
What additional modifications can I make to my life insurance
coverage?
There are a number of other modifications that you may make to your life insurance policy as well. For example, you may request that a name be removed from a joint life insurance policy or that the method by which you pay your premiums.
Conclusion
Changing your life insurance policy in the event of any big happening is a wise decision. You want to make sure that your coverage amount is sufficient to help your loved ones. Sometimes, your financial conditions improve, and you don’t need that sort of coverage. It’s advisable to change the policy and use the money elsewhere!
