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How to ensure you’re not over-insured.
The best life insurance policy for you will provide enough coverage to keep your dependents whole in case you die. This generally means that the benefit needs to cover your income, assets, major debts, and future obligations, like the cost of college, your spouse’s retirement, or your funeral expenses.
But your needs can change. For many people, life changes can mean that they need to purchase additional life insurance. But other life changes can mean that you no longer need as much life insurance as you initially purchased.
If you can still afford the premiums, there may be no need to make a change. But if you feel that your premiums are higher than you’d like and you don’t need the coverage that go with them, you have some options to lower your coverage amounts — and your premiums.
For term life insurance and whole life insurance, you can generally elect to decrease your coverage amount at least one time after three years of the policy, which will, in turn, reduce your premiums.
Most life insurance companies let you decrease your coverage at least one time during the life of the policy. Standard operating procedure varies by carrier and product. Some insurers won’t let you change a policy until it’s been in force for a year; others make you wait three. And some don't guarantee they’ll approve a coverage decrease, but usually will.
If you have a permanent life insurance policy, you may have even more options. Adjustable life insurance — also known as flexible premium adjustable life insurance or even just flexible life insurance — is a type of universal life insurance that lets you change certain facets of your policy. That includes your coverage period, premiums and death benefit. Other policies may allow you to use the accumulated cash value to lower your premiums. Talk to your insurance provider about your options.
While it might seem you’d want coverage to last your whole life, term life is actually the best choice for 80%-90% of shoppers.
If you’ve unexpectedly outgrown your coverage, call your insurer or agent. They’ll let you know if you can decrease coverage and, if so, what restrictions may apply. They can also tell you how your premiums will be affected by the coverage change.
Keep in mind, too, that if you need to lower your premiums, you may have other options than lowering your coverage amount. For example, if you’ve made significant lifestyle change — for instance, you quit smoking or have lost some weight — you may be eligible for lower rates under a process called reconsideration.
With reconsideration, you retake the life insurance medical exam a year or two after your policy is in force in order to be eligible for a better health class — and lower premiums.](https://www.policygenius.com/life-insurance/term-life-insurance-rates/).
If you are interested in reconsideration, it’s also worth getting new quotes, as it’s possible that a different company could have better rates.
Read more about life insurance reconsideration and reapplication.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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