You see car insurance advertisements all the time that are urging you to compare costs and switch companies. It would also make sense to shop life insurance carefully as well so you can take advantage of better rates from different insurance companies. Unfortunately, life insurance policies are put together differently than car insurance policies. Before you begin shopping for new life insurance, you need to look at the coverage you already have and the potential costs of switching to a new company. In some cases making a switch is a good idea, but in other cases it can be more expensive than staying with your current company.
Some Negative Consequences of Switching Life Insurance Companies
Life insurance rates are based on several factors, including your health and your age. If you are thinking about switching to a new policy with a new company, you need to remember that you are older now than you were when you first signed up for your existing policy. Your new rates could be more expensive based on your age. Some life insurance policies require a long investigation process if you die within two years of purchasing the policy, which could delay the benefits from reaching your dependents after your death. Make sure you understand all of the possible consequences of shifting to a new policy before you close out your old policy.
When It Saves You Money
The best reason to switch to a new life insurance company is when it will save you money on your premiums. Even if you think you are paying a fair price for your coverage, it is always a good idea to do some research into prices from other insurance companies. You might find that you could save hundreds of dollars by switching to a new policy through a different company. Online quotes can give you cost information for several insurance companies at once, which makes it easier to compare policies and prices directly.
When Your Life Changes Dramatically
Another good reason to switch your life insurance coverage is when you life changes in a big way. If your family dynamic shifts so that there are fewer dependents counting on your income, you might not need to carry as much life insurance. If your family grows, you may want to purchase a larger policy to cover your larger family. Any time there is a change in your contribution to the family or the number of people counting on you, it is a good idea to look at your life insurance options and consider making a change.
Making the Switch Cautiously
Look into all of the potential costs of switching to a new life insurance policy before you file any paperwork. The first year of a policy is usually the most expensive because that is when you are paying off the agent’s commissions and other administrative fees that are associated with your policy. Compare the overall local insurance policy coverage of each policy against the amount of money you expect to pay out for the rest of your existing policy. If the new policies are cheaper in the long run, switching is probably a good idea.