How To Decrease The Amount Of Term Life Insurance


Term-life insurance is a contract between an individual and an insurance company to pay a specified amount of money if the individual passes away during the term of the contract. Term-life covers the individual for a specified amount of time, so it is meant to cover temporary needs, like car or home loans, that have a definite end date where the insurance will no longer be needed. An insured might want to lower the amount of insurance to reduce the cost; however, the price of insurance might not go down by reducing the amount of insurance, and the amount of insurance possibly cannot be reduced at all. Other options to reduce the cost of insurance would be to reduce the overall term of coverage, or to cancel the policy and start a new one. Consider all options before decreasing your term-life insurance policy to ensure it is in your best interest.

Step 1

Call your insurance agent or company and ask whether it’s possible to reduce the face amount of your term insurance policy. The policy may already be at the lowest possible level set by the insurance company. If it can be reduced, ask him to quote the new amount or term of insurance you would like to reduce it to. Life insurance is priced in levels, and gets cheaper per thousand of coverage at certain levels. Life insurance is priced in dollars-per-thousand in coverage, so $100,000 in coverage might be ten cents a month per thousand, but $250,000 in coverage might be eight cents a month per thousand. If you are near a discount level and drop below that level then the price you pay will not be much lower for the reduced coverage. For instance, if you have $250,000 in insurance, and want to drop to $200,000 (20{d3e9b28a6411039c1fbd6a4777196b5d6a954941551e4580a51f23e495f3ea19} decrease), but there is a 20{d3e9b28a6411039c1fbd6a4777196b5d6a954941551e4580a51f23e495f3ea19} price break at the $250,000 level, then the cost would be the same (you would have a 20{d3e9b28a6411039c1fbd6a4777196b5d6a954941551e4580a51f23e495f3ea19} drop in coverage with a 20{d3e9b28a6411039c1fbd6a4777196b5d6a954941551e4580a51f23e495f3ea19} increase in cost).

Step 2

Request a change form to decrease the coverage. You can request a change form to decrease the amount or term of the insurance. Ask if you can send it back electronically, or if original signatures are required. Complete, sign and return the form. Keep a copy for your records. After sending the form you cannot change back to the higher amount or term without new underwriting, which usually entails re-checking your medical records, new underwriting questions, and sometimes a new blood sample. If anything changes with your health then you might not re-qualify for the increase. Make sure this is what you want to do before turning in the change form.

Step 3

Call back in one week to ensure the change form was received and implemented. If not, send a copy of the request and ask for a rush to be placed on the change. When the new policy arrives, review it to make sure the changes were properly made and store it in a safe place.

Also as we see how terminal diseases are becoming more common day after day getting yourself insured is one sure way to protect you or your family financially from any unforeseen event. For instance you can look online for cancer life insurance quotes to get a fair idea of what is the amount of premium you have to pay in order to get yourself an insurance.