If you want to switch life insurance companies, you simply apply for the new policy, then drop your current policy after your new one is in place. Some companies also offer promotions that allow you to convert your term insurance from another company, to a permanent policy with their company.
Great question! To give you a simple answer, you just apply for a new one, and once covered, write and surrender the old policy. Some things to consider first though - if the policy is graded or modified, you will have to go through the grade period again; and if you have a significant amount of cash value in the old policy, or loans through it, what are the ramifications of replacing the policy in regards to that cash? There can also be problems if you apply to several companies, and are denied coverage for some reason by one or more of them. I would advise you to talk this through first with a trusted agent before making a move. If you would like more information, contact me, I'd be happy to help. Thanks for asking!
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
In short, you can't simply switch companies for your existing coverage - you need to apply for a new policy with the new carrier and go through new underwriting. Once the new coverage is in force, you can let the old policy lapse on its own (by no longer paying the premiums) or outright terminate it.
The advantage of buying a new term insurance policy is that you have a new term period to work with. For permanent insurance, you may find a policy that offers lower monthly premiums or features better guarantees inside the policy - completing a 1035 exchange (rolling over the cash value of the old policy to the new policy) can reduce your monthly premiums.
If you have a term insurance policy, you may have a conversion option available that would allow you to convert all or a portion of the face amount from a term policy to a permanent program - this keeps the same risk class as the earlier program and does not require any new medical underwriting (a great advantage if you've got preferred rates and have a medical condition that puts you at standard or sub-standard rates or would otherwise decline you under a new policy).
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The advantage of buying a new term insurance policy is that you have a new term period to work with. For permanent insurance, you may find a policy that offers lower monthly premiums or features better guarantees inside the policy - completing a 1035 exchange (rolling over the cash value of the old policy to the new policy) can reduce your monthly premiums.
If you have a term insurance policy, you may have a conversion option available that would allow you to convert all or a portion of the face amount from a term policy to a permanent program - this keeps the same risk class as the earlier program and does not require any new medical underwriting (a great advantage if you've got preferred rates and have a medical condition that puts you at standard or sub-standard rates or would otherwise decline you under a new policy).