Can I Change My Mind and Switch Life Insurance Policies?


Can I Change My Mind and Switch Life Insurance Policies?: Years after buying life insurance, you might find that the policy you picked is no longer the best. It happens. Finances and life’s circumstances evolve. There are potentially ways to reverse course without buying a new policy.

Changing term life to whole life: Term life insurance policies often include a “term life conversion” option that allows you to convert the policy to a permanent life insurance policy. There’s a deadline for doing this, so check your policy for the conversion period. Your life insurance may have a few choices of permanent life insurance for the conversion. Or it may offer only one conversion option, and it might not be a whole life insurance policy.

Changing whole life to term life: If you’ve built up cash value within a whole life policy, you can ask your insurer if you can use the cash value to switch to a term life policy that’s paid up and end the whole life policy. Your life insurance company will be able to tell you the length of the new term life policy based on the money in your cash-value account.

Life Insurance Alternatives: There are life insurance alternatives beyond whole life and term life. Universal life insurance is a type of permanent life insurance that can offer cash value if that’s your priority. Here are the main varieties of universal life insurance.

Guaranteed universal life insurance: Guaranteed universal life (GUL) insurance offers the lowest risk universal life policy and is typically the cheapest universal life type. Guaranteed universal life insurance provides a level death benefit and your premiums don’t change. But these policies also have minimal cash value. Guaranteed policies additionally don’t allow you to adjust premiums and death benefits, which may be an option in other types of universal life insurance policies.

Indexed universal life insurance: An indexed universal life insurance policy bases your cash value on gains and losses connected to an index, including S&P 500, or a fixed-interest investment. It offers more flexibility than GUL insurance by allowing policyholders to adjust premiums and death benefits, within limits. Indexed universal life insurance generally has high policy fees and charges. These charges reduce the amount of money going toward your cash value.

Variable universal life insurance: A variable universal life insurance policy links your cash value’s success to sub-accounts that may contain stocks and bonds. You can adjust premiums and death benefits, which is similar to indexed universal life. You’ll need to take an active role in deciding on the investments when you have a variable universal life insurance policy. Your decisions on your sub-accounts affect your cash value gains and/or losses

Variable life insurance: Variable life insurance sounds similar to variable universal life insurance, but there are key differences. Variable life insurance doesn’t allow you to adjust your premium payments, like variable universal life insurance.

Burial insurance: Also called final expense and funeral insurance, burial insurance is a permanent life policy with a relatively small death benefit meant to pay for final expenses. These policies are typically guaranteed to issue life insurance, which means you can’t be turned down and there’s no life insurance medical exam. Burial insurance policies are more expensive than other types of coverage but can be the only option for older people who don’t have great health.

Supplemental life insurance: Employers may offer life insurance to employees at low or no costs. These group policies are usually connected to your employment, so you lose coverage if you leave your job. These supplemental life insurance policies usually have smaller death benefits and generally shouldn’t be your sole life insurance coverage. But they can be a nice way to supplement your own individual life insurance.

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