How You Can Save 1000s of Dollars on Term Life Insurance Renewals
What is a renewal anyway? When you buy a term life insurance policy, it has a fixed cost for a fixed period of time. For example, 10 year term insurance means the monthly payment (called “premium” in insurance lingo) stays the same each month for the first 10 years but it doesn’t end then. The 10th anniversary date is referred to as the policy “renewal” date, and while the policy continues on automatically, the premium increases for the next 10 years at the new amount. This amount is spelled out in the policy. No new medical underwriting is required on your part. If you own a 10 year term policy, dig it out and you should see a payment schedule that shows an increase every 10 years.
A $3000 example. Suppose Jack is a 30 year old male, non-smoker who needs $250,000 of life insurance to cover off his mortgage debt. He is cost conscious so chooses a 10 year term policy that costs $19 a month. This seems like a good deal.
10 years later, Jack turns 40 and receives a letter from the insurance company that his policy is renewing and that the premiums are increasing.. Jack is busy, glances at it and even files it away for safekeeping. If Jack had pulled out his policy, it would have read that after 10 years, the policy increases to $48 per month, a $29 increase or about 2.5 times the monthly payment for the first 10 years.
How Jack could save $3,000? If Jack is healthy i.e. could pass an insurance medical and were to buy a new $250,000 policy as a 40 year old, the premium is $23 a month, $25 less per month that the original policy. What is $25 dollars a month for 12 months? $300. What is $300 a year for 10 years? $3,000.
If you have a term policy that you have been paying on for years, I can review your policy and determine if this strategy will work and how much you may be able to save at renewal. Let me track your life insurance policy renewals and ensure you are taken care of with your life insurance needs. If you are in good health, I might be able to help you save a lot while still giving you the protection you need.
Learn more about life insurance by downloading the Canadian Life and Health Insurance Association Guide to Life Insurance.
Disclaimer: All quotes are for illustration purposes and accuracy cannot be guaranteed. Actual premiums and coverage will be based on age, gender, health history, certain underwriting criteria, and tobacco usage.
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