Cost & Coverage
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Your health and smoking status can increase the cost of the premiums you pay for life insurance. If your health improves or you quit smoking, you might be eligible for lower rates through reconsideration or reapplication.
Reconsideration is when you ask your current insurer to take a second look at your health profile so that you can pay less in life insurance premiums
Reapplication is the process where you apply for a completely new life insurance policy to get a better life insurance rate
You usually need to wait at least a year before asking your insurer for reconsideration or see substantial changes in your health that validate applying for a new policy
If your premiums seem too high for your budget, you can minimize how much you spend on your policy by decreasing the amount of coverage or the policy’s term length
Sometimes when you apply for life insurance, the premium rate you are offered comes back higher than you expected — usually because of something that came to light during your medical exam or medical records check, like a medication or medical condition you forgot to disclose. This offer is called a modified offer.
Even if the premiums are expensive, the best course of action is usually to accept the offer so that you have coverage and pursue a course of action to lower your rates in a year or two: either reapplication or reconsideration.
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Reconsideration, also called rate reduction or re-rating, is when you ask your insurer to look at updated medical records and medical exam results to lower your rate. Most insurers will require that you go through the underwriting process again —specifically the medical exam— to prove that updates in your health warrant a rate reduction.
Life insurance companies offer reconsideration on a case-by-case basis after you’ve had an active policy with them for a year or two. Many people try to ask for reconsideration when they receive their original life insurance offer, but the insurer’s offer is based on an underwriter’s careful review of your medical records and the results of your medical exam — there’s no room for negotiation until at least a year has passed.
The reconsideration process varies for each life insurance company and is at the discretion of each underwriter. But there are a few things that are consistent across life insurance companies that do reconsideration:
To consider you for any kind of rate reconsideration, the underwriter will want to see at least one year of progression in your health records from the time your policy is in force.
If, for example, you received a low health classification because of high blood pressure, the insurer would not only want a new medical exam that showed lower blood pressure, but they’d also want to look at your medical records for the past year and see several doctors’ visits with lowered blood pressure.
The same philosophy applies to any other medical condition that may have caused the underwriter to initially give you a lower health classification and charge you higher premiums.
In addition to pulling more medical records, your life insurance company will also want you to take another medical exam. Some insurers will pay for the medical exam if you’d like your rate to be reconsidered, but some will charge you for the medical exam. (You are never charged for the exam during your initial application.) When you ask about reconsideration, you’ll want to ask about the associated costs as well.
After you take a new medical exam and the underwriter looks at your medical records, you receive a decision about your application for a rate reconsideration. Hopefully, you are offered lower rates, but the decision is completely up to the underwriter and is done on a case-by-case basis.
If your insurer declines to give you a lower rate on your policy, you’re still covered by them at the same rates that you were paying before and they won’t increase your rates or cancel your policy. But if you still want lower rates, you can apply for a new life insurance policy to see if you can find lower rates elsewhere.
How do the best life insurance companies treat reconsideration? Check out the graph below to see what each insurer offers.
|LIFE INSURANCE COMPANY||RECONSIDERATION POLICY|
|Prudential||Policy must be in force for two years for a health reclassification. The highest rating possible with a reclassification is Preferred, but all underwriting costs are covered by the insurer.|
|Banner Life||Reconsideration requests can be made through Banner's customer service department. Any underwriting costs will be at the expense of the policy owner.|
|Pacific Life||Reconsideration possible after a two-year waiting period — with some exceptions. The insurance insurer will cover underwriting costs if they request information regarding rate reduction, but if the policyholder is requesting reconsideration, they must cover costs.|
|Mutual of Omaha||New application and underwriting required.|
|Protective||Best insurer for reconsideration. Requests for rate class improvement can be made after the policy's first year and underwriting expenses are covered by the insurer.|
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Reapplication is simply applying for a new life insurance policy and going through the underwriting process from start to finish again. While reconsideration is specific to the life insurance company you’re already covered by, reapplying for life insurance means you can get coverage from a different insurer.
If you decide to apply for a new life insurance policy, you’ll want to cancel your current policy so you’re not paying two premiums. It’s important to wait to cancel your current policy until your new policy’s effective date so that you don’t experience a coverage gap.
If you have a term life insurance policy, there are two ways that you can cancel your coverage:
1. Quit paying your premiums so that the insurer cancels your policy
2. Provide written notice to your insurer that you would like to cancel your policy
If you have a whole life insurance policy, canceling your policy can get more complicated and usually requires a call to the insurer. Each insurer operates differently, but you may be able to cancel your policy in one of the following ways:
1. Cash out the life insurance policy, though there may be fees and penalties during a whole life insurance policy’s surrender period
2. Opt-in for a reduced paid-up option, where you stop paying premium payments and receive a reduced death benefit on the whole life policy
3. Let your policy lapse by not making your premium payments
Life insurance rates generally increase 8-10% every year that you age, but if you received a low health classification and plan to apply for reconsideration or reapplication, there are a few steps you can take to increase the likelihood that you’ll receive a lower life insurance rate.
High blood pressure, diabetes, or any other medical condition often leads to a higher price tag on your life insurance policy. If you received a lower classification due to health and plan on reapplying for life insurance, improving your health is your best bet to get a better offer your second time around.
While some elements of our health are not always in our control, following a doctor’s treatment plan, exercising regularly, and eating a healthy diet may be able to score you lower life insurance premiums.
Smokers pay a lot more than nonsmokers for life insurance. The further away you get from your last cigarette, the higher the likelihood that you’ll receive a lower life insurance rate.
Generally, life insurance companies will consider you a nonsmoker five years after you’ve successfully quit smoking, though each life insurance company has their own guidelines. For the most part, you can expect to receive the following classifications after you quit smoking to get lower life insurance rates:
1 year of no smoking- Standard non-tobacco rates
3 years of no smoking- Standard Plus/Preferred rates
5 years of no smoking- Preferred Plus rates
It’s also possible that reconsideration or reapplication could result in lower rates simply from the passage of time. Just as you need to be five years away from your last cigarette to be considered a non-smoker, insurance companies want to see several years without recurrence after some medical events before they lower your rates. For instance, if you had cancer that went into remission with treatment, the more time that has passed without having a recurrence, the lower your rates will be. Your agent can give you an idea of the number of years you may need to wait depending on your condition.
If you think you’re paying too much for life insurance, a Policygenius agent can help you find a new policy you can afford.
While you might be able to lower the cost of your life insurance premiums with reconsideration and reapplication, these are long-term solutions that don’t necessarily help you get lower life insurance rates in the present.
Understandably, you may need lower life insurance rates now. There are a few steps you can take before you sign your life insurance policy to decrease how much you’re spending on your premium payments:
Generally, the lower your life insurance coverage, the less you will be required to pay on your premiums. If you applied for a $500,000 policy and your premiums come back too high, you can talk to your agent about lowering the death benefit in order to lower the cost of your premiums.
While you may still be paying more for that amount of coverage than other healthy people your age, you’ll still be able to get a more affordable premium rate.
If you’re purchasing a term life policy instead of a whole life policy, adjusting the term is one way to lower the premium cost. Adjusting a 30-year term insurance policy to a 20-year term insurance policy could significantly reduce your premium rates. Again, your agent can help you find the right term length.
By paying your life insurance premiums annually instead of monthly, you can sometimes save between 2% and 8% on how much you pay.
Whatever you decide, some coverage is better than no coverage, so the most important thing is to find a sweet spot with the most coverage and longest term possible at a premium you can afford. Your insurance agent can help you find a policy value and term that makes the most sense for you.
Once you finalize your policy and have life insurance, you can work to improve your health and ask for reconsideration or reapply for a new policy after one to two years.
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