If you can even afford the agio and placid need some sum of life insurance, there may be no indigence to make a switch. But if your premiums are excessively high and you don ’ t need the coverage that goes with them, you have some options to lower your coverage sum — and your premiums. Key Takeaways
- You should recalculate your coverage needs after any major life consequence .
- Your life insurance death benefit should cover your wage, dependents, debts, and early expenses .
- Most insurers allow you to decrease your coverage after one to three years of owning the policy .
How to adjust your life insurance coverage
For term life indemnity and unharmed life insurance, the two most common types of liveliness indemnity, you can by and large decrease your coverage sum at least one time during the life of the policy by contacting your insurance company. Some policy companies won ’ triiodothyronine permit you change a policy until it ’ sulfur been in wedge for a year ; others make you wait three. And some do n’t guarantee they ’ ll approve a coverage decrease when you sign, but normally will depending on the circumstances .
Reducing your term life insurance by company
See how the peak term life policy companies allow you to decrease coverage based on how retentive you ’ ve held the policy and how much coverage you own. For all of the companies below, the decrease is priced using your senesce when you were inaugural insured, which means you won ’ triiodothyronine be subject to higher premiums due to old age or new health issues .
| company name | Can you decrease your policy ‘s confront sum once in push ? | Restrictions | minimal coverage | |
|---|---|---|---|---|
| AIG | Not guaranteed | After four years | $100,000 | |
| Banner Life (Legal & General America) | Yes | After one year | $100,000 | |
| Brighthouse | Yes | After one year | $100,000 | |
| Lincoln Financial | Yes | After three years | $100,000 to $250,000, depending on policy | |
| Mutual of Omaha | Yes | After one year, one decrease for life of policy | $25,000 to $100,000, depending on policy | |
| Pacific Life | Yes | One decrease per year | $50,000 | |
| Protective | Yes | After three years, one decrease per year | $100,000 | |
| Prudential | Not guaranteed | Not specified | $100,000 | |
| SBLI | Yes | Not specified | $100,000 | |
| Symetra | Yes | After one year | $250,000 | |
| Transamerica | Yes | After three months, once per month | $25,000 |
methodology : information based on policies from AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential, SBLI, Symetra, and Transamerica and may vary by carrier wave, term, coverage measure, health class, and state. not all policies are available in all states. Valid as of 12/08/2021 .
Universal life insurance
If you have a permanent wave life indemnity policy, you may have even more options. adjustable life insurance — besides known as flexible premium adjustable life policy or flexible animation indemnity — is a type of universal life indemnity that lets you change your coverage period, premiums, and death benefit. other policies may allow you to use the roll up cash rate to lower your premiums. Talk to your indemnity provider about your options .
How to know if you have too much life insurance
Before you buy life sentence indemnity, it ’ randomness authoritative to figure out how much life insurance you need. An freelancer broke or agent can help you weigh your income, debt, and other fiscal factors to determine the right sum of coverage for your syndicate .
How to re-calculate how much life insurance you need
After a big life event, reconsider how much coverage you need. Start by looking at your gross wage, which may be significantly more or less than it was when you first signed your policy. Policygenius experts suggest aiming for 10 to 15 times your income. then, score up your long-run fiscal obligations ( expenses and debts ) and subtract your resources ( after-tax income and liquid assets ). That will give you your coverage gap, which is the measure of coverage you need. Don ’ metric ton forget to add in some cushion for unexpected events.
Below is one scenario for a 50-year-old female who had minor dependents and a mortgage when she beginning bought her 30-year terminus biography policy, but no long has the same obligations .
| age | Obligations and dependents | income | annual fiscal obligations + debt | Liquid assets | coverage Gap | policy sum | |
|---|---|---|---|---|---|---|---|
| 35 | Minor children, mortgage, spouse | $65,000 | $350,000 | $20,000 | $1,000,000 | $1,000,000 | |
| 50 | Spouse | $90,000 | $175,000 | $50,000 | $500,000 | $500,000 |
In this exercise, the policyholder is overinsured by $ 500,000 with 15 years left in her terminus. Decreasing her coverage sum will help her write money on premiums. → Read our full scout to calculating how much life policy you need quick to shop for biography insurance ? Start calculator
How to lower your life insurance coverage
If you ’ ve outgrown your coverage, the first gradation is to call your insurance company or agent. They ’ ll let you know if you ’ re eligible to decrease coverage and what restrictions may apply. They can besides tell you how your premiums will be affected by the coverage deepen .
Alternative ways to lower your life insurance premiums
If you need to lower your premiums but don ’ thyroxine want to decrease your policy ’ s face measure, you may have other options .
Make a lifestyle change
If you ’ ve made significant life style changes — such as quitting smoke or losing weight — you may be eligible for lower rates under a process called reconsideration. With reconsideration, you retake the life indemnity aesculapian examination a class or two after your policy is in force in order to be eligible for a better health class — and lower premiums. → Learn more about life indemnity reconsideration and reapplication
Annual vs. monthly premiums
You can besides try paying your premiums per annum rather of monthly, which can get you a discount between 2 % and 5 % and save you money in the long run. Having besides much life policy means paying for coverage you don ’ t need, which negates the benefits of having life policy. lecture to an agent or contact your policy company to see if lowering your policy sum is correct for you.
Read more: Debt Restructuring Definition
Frequently asked questions
Can you have too much life insurance?
Yes, you can be overinsured with besides a lot life policy. This occurs when your policy total outweighs your fiscal obligations minus your assets .
Is there a limit to how much life insurance you can have?
You can have multiple life policy policies, but your age, internet worth, and income determine how much coverage you ’ re eligible for with the insurance company .
What happens if you outlive your life insurance?
If your term policy expires, you will no long have life indemnity coverage. You may no longer need life policy, but if you do, you can convert to a permanent wave policy or buy modern term insurance .
