Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Generally, you want to have some form of coverage if you have a need for it.
If you have a term insurance policy, you will generally drop it when the initial premium guarantee period expires - at this point, the policy would become annually renewable and the premium will increase each year by a substantial amount (based on age). People will generally replace an expiring term insurance policy with a new term policy or a permanent policy.
If you have a permanent policy, you're generally keeping it for life - that's why you bought a PERMANENT policy. However, there are many situations why people "drop" these policies. A common one is because they may be able to secure a lower premium, better guarantees, and/or better cash value build-up. When people change from one permanent policy to another, they may do a 1035 exchange/rollover to reduce the premiums they're paying each month (this is done by taking the cash value from the old policy and using it towards the first year's premium on the new policy.
A lot of people tend to drop their coverage because they can't afford the premiums. Many programs allow you to reduce the face amount of the policy to reduce the premiums - so you don't necessarily need to drop your coverage because you can't afford the original rates. Why would you do this rather than just drop the policy altogether? - your program's existing risk class and your current medical insurability. You may also consider converting your term program to a permanent policy as well.
I highly recommend consulting with your agent before dropping your coverage to make sure it's the right move for you. There may be alternative courses of actions you haven't thought of that are available to you that may play out better for you in the long run.
Dropping life insurance is not usually advised, as we all die someday. However, there are circumstances to dropping a policy. The first would be becoming independently wealthy with no debt. Whether you sell a business or win the lottery. The next reason would be if a term policy were to expire. Practically all term policies increase premium ten fold when the term ends. This will force a policy owner to change and give an underwriter another chance to look at a person's health history, lifestyle, occupation changes, etc. Otherwise, try to change a policy not just cancel one.
Recruiter/Manager, Cole Insurance Investments, Charlotte N.C.
In the last ten years do to Investment life insurance I wouldn't recommend dropping life insurance. The polices have become an investment with new technology and designs of the policies. However if you have an older policy you might want to cash out put some money in your pocket and take a look at the new policies you would need to talk with your agent so he or she could help you make the proper move. First an foremost in most cases you should never be without life insurance . A sickness could damage your finances or a auto accident that's your fault and you are not insured thru your auto insurance in the amount to cover a possible death in the accident could destroy everything you worked all your life to save.
It is of course your right to cancel, your insurance when you want to. There are a number of factors you should consider as mentioned by the others including whether or not or not you need the coverage now or will in the future and any tax consequences from surrendering the policy. Discuss with your agent/broker before you take any action to be sure you are making an informed decision.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
This is a really good question. Everybody asks it.
You do have some options. Let’s see what the ramifications would be of choosing each one.
You could drop it when you feel it has outlived its use.
Let’s suppose you originally bought a policy for family protection. But now, the kids are out of the house. You probably feel you don’t need life insurance any more.
But what about the next stage of your life? And the stage after that?
What if you need to maximize your pension distribution?
What if a child - or for that matter a parent - becomes dependent on you later in life?
What if you want to leave a legacy of charitable bequests?
What if you want to start a business after you retire, and need to indemnify a bank loan?
Sure, you could always pick up coverage at that point. You think. Assuming you qualify medically and otherwise. And assuming you want to pay the extra cost due to a higher age.
Then again, you could drop it when you feel you can afford to self-insure.
So now you have a accumulated a sizable portfolio of assets. Your net worth is right up there. Why should you pay for life insurance when there is so much money at the disposal of your heirs?
But if you have demonstrated such savvy in reaching this pinnacle of success, you would certainly consider the following:
What percentage of your asset portfolio is liquid? Life insurance would pay your beneficiaries within days. If any bills have to get paid right off the bat, they will need liquidity.
What about a estate equalization? Some of your heirs may be in business with you and therefore inherit the firm. What about your children who are not working with you? You probably want to take care of them as well. Life insurance could give them the same value as those children who inherit your business property.
How about estate taxation? Why would you want to pay Uncle Sam a ton of money dollar for dollar when you could have a life insurance policy take care of that obligation for pennies on the dollar?
The bottom line is that you could drop your life insurance any time you want. You just need to be prepared to face the consequences.
.JPG){kind=avatar}
If you have a term insurance policy, you will generally drop it when the initial premium guarantee period expires - at this point, the policy would become annually renewable and the premium will increase each year by a substantial amount (based on age). People will generally replace an expiring term insurance policy with a new term policy or a permanent policy.
If you have a permanent policy, you're generally keeping it for life - that's why you bought a PERMANENT policy. However, there are many situations why people "drop" these policies. A common one is because they may be able to secure a lower premium, better guarantees, and/or better cash value build-up. When people change from one permanent policy to another, they may do a 1035 exchange/rollover to reduce the premiums they're paying each month (this is done by taking the cash value from the old policy and using it towards the first year's premium on the new policy.
A lot of people tend to drop their coverage because they can't afford the premiums. Many programs allow you to reduce the face amount of the policy to reduce the premiums - so you don't necessarily need to drop your coverage because you can't afford the original rates. Why would you do this rather than just drop the policy altogether? - your program's existing risk class and your current medical insurability. You may also consider converting your term program to a permanent policy as well.
I highly recommend consulting with your agent before dropping your coverage to make sure it's the right move for you. There may be alternative courses of actions you haven't thought of that are available to you that may play out better for you in the long run.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
You do have some options. Let’s see what the ramifications would be of choosing each one.
You could drop it when you feel it has outlived its use.
Let’s suppose you originally bought a policy for family protection. But now, the kids are out of the house. You probably feel you don’t need life insurance any more.
But what about the next stage of your life? And the stage after that?
What if you need to maximize your pension distribution?
What if a child - or for that matter a parent - becomes dependent on you later in life?
What if you want to leave a legacy of charitable bequests?
What if you want to start a business after you retire, and need to indemnify a bank loan?
Sure, you could always pick up coverage at that point. You think. Assuming you qualify medically and otherwise. And assuming you want to pay the extra cost due to a higher age.
Then again, you could drop it when you feel you can afford to self-insure.
So now you have a accumulated a sizable portfolio of assets. Your net worth is right up there. Why should you pay for life insurance when there is so much money at the disposal of your heirs?
But if you have demonstrated such savvy in reaching this pinnacle of success, you would certainly consider the following:
What percentage of your asset portfolio is liquid? Life insurance would pay your beneficiaries within days. If any bills have to get paid right off the bat, they will need liquidity.
What about a estate equalization? Some of your heirs may be in business with you and therefore inherit the firm. What about your children who are not working with you? You probably want to take care of them as well. Life insurance could give them the same value as those children who inherit your business property.
How about estate taxation? Why would you want to pay Uncle Sam a ton of money dollar for dollar when you could have a life insurance policy take care of that obligation for pennies on the dollar?
The bottom line is that you could drop your life insurance any time you want. You just need to be prepared to face the consequences.