Many of us go through this drill! We buy a term insurance policy that increases at a certain rate every 5, 10, 20 years or so. In our optimism, we ignore the impact of those increasing premiums. However, those years tend to pass by very quickly. Suddenly, we are faced with a doubling of our insurance costs, or worse!
Many people take a term insurance renewal for granted. Regrettably, Insurance agents may have gone onto other ventures, retired or lost interest. Someone should suggest that there are other options! The insurance marketplace has become very competitive over the past three decades that we have seen in this business. Most of the time, your rate can be renegotiated at a much more attractive rate.
There’s a bit of an obstacle though. You must prove to an insurance company that your health is still decent. Therefore, you will need to re-apply, answer some medical questions and perhaps take a short medical exam.
How to Negotiate Your Term Insurance Renewal
If you have experienced a huge increase in term insurance
renewal rates, here’s what you need to do:
- Work with an independent and experienced insurance broker to perform a thorough needs analysis. Most importantly, we must peg a value to your “human capital” – i.e. the income lost if you die. Your needs change over time and now is a great time for a thorough review. Done properly, your advisor should be doing this in the context of a proper financial plan.
- Design an insurance portfolio that will secure your family’s short term and long term requirements. Thankfully, gone are the days of “one size fits all.”
- Have your insurance broker conduct a thorough market survey. If your insurance advisor only represents one company, it’s probably time to find a new advisor.
Never assume that you are getting the best deal on your coverage. Do not take it for granted that your coverage is properly optimized for your unique circumstances. Your family’s security is at stake.
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