What is Term Life Insurance?

Term life insurance provides life insurance protection for a pre-determined length of time. The most common term lengths are ten years, twenty years, or until age sixty-five. During the term, rates and coverage are typically guaranteed to stay the same, though there are some exceptions. Just prior to the end of the term, the policy owner will receive a notice outlining the new cost to continue with the coverage at renewal.

What Happens at Renewal?

Most often, the cost of renewing insurance for a new term is anywhere from 2.5 to 5 times higher than the previous cost. The older the insured is at the time of renewal, the larger the increase in cost is. This is because renewals happen automatically without a need for medical underwriting. The insurance company, not knowing the state of your health at renewal, increases rates to reflect the risk they are taking.

In our experience, a lot of individuals do not read these renewal letters and their policies automatically renew at a higher cost. This is why we recommend reviewing your insurance policy(ies) every 4-5 years. This can help eliminate these unexpected increases.

What Are Your Options?

In a perfect scenario, at renewal, you no longer require your term life insurance. Perhaps it was set up to protect debt or a young family, and those obligations have passed.

Often, coverage is still required. Either life circumstances have changed or the term that was originally purchased was too short (ten years instead of twenty years or age sixty-five). This might have been done to keep costs low or because of short-term planning.

Instead of renewing, the policyholder can choose to reapply if they are healthy. I strongly recommend client(s) apply and attain a decision on new coverage before canceling any existing coverage. This usually means applying months before the renewal date to allow time for the insurance companies to review your application. Alternatively, if your life insurance needs have decreased, you can apply for a lower amount, which will reduce the cost.

We, at Schill Insurance, are brokers, which allows us to shop the market, go to all 25 insurance companies and source out the best coverage and price for each client. Our recommendation would be to contact your Schill Life insurance agent to assist you with this process.

Review Your Life Insurance Policy

Take the time to look over your term life insurance policy to answer the following questions:

1. When does my policy renew?
2. How much longer is remaining at the current rates?
3. What will the renewal rates be?
4. How much coverage does the policy provide? Is it enough or too much based on your circumstances today?
5. Are your beneficiaries updated and/or correct?
6. Have there been any changes to your situation (marriage, separation, divorce, new additions)?

Insurance is customizable. Nowadays, products are designed to be custom for each client’s situation/scenario. We are happy to assist you with your insurance needs – just give us a call!