Should You Refinance Your Life Insurance Policy?

Many life insurance companies have been making changes that are affecting policies.

When interest rates go down, people refinance their homes. Maybe they need funds for college tuition costs or a remodel, or they want to extend the loan out to save money on their payments. But most people don’t think about refinancing their life insurance policies, and that could be dangerous. If you purchased life insurance five or more years ago, it would make sense to look over your policy to be sure it was set up correctly and will be there when you need it. Many life insurance companies have been making changes that are affecting policies.

If you purchased life insurance five or more years ago, it would make sense to look over your policy to be sure it was set up correctly and will be there when you need it

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  1. Term life insurance is a low-cost alternative where you can lock in low-cost rates for 10, 15, 20, 25, or 30 years. Rates are guaranteed for the number of years you purchase. Term life insurance pays a death benefit if someone dies prematurely. It is pure insurance that only offers a death benefit. After the 10th, 15th, 20th, 25th, or 30th year of your guaranteed premium, rates skyrocket. Most people don’t keep term life insurance because it usually becomes unaffordable. Now could be a good time for you to look at your term life insurance since insurance companies have lowered rates. You could lock in lower rates or extend your term life insurance coverage for close to the same rates you’re paying now, if you qualify.
  2. Permanent life insurance consists of many different types of life insurance policies (e.g., universal life, indexed fixed universal life, whole life, variable life, guaranteed universal life). We have seen life insurance companies increase their mortality rates and lower their interest crediting rates. This can and has affected life insurance policies in a negative way. People who bought policies 5, 10, 15, 20, 30 years ago, or longer think their policies will be there when they need them. However, because of the changes, these policies, which were presented to last until age 95 or later, are now not going to last that long. We see policies falling apart at age 70, 75, 80, and beyond. The good news is that many times, simply adding more premium can fix these policies.

We highly recommend you conduct an audit of your life insurance policies. A life insurance audit will show you exactly where you stand today. It will show you how long your present policy will last at the current premiums you are paying, and show you what premiums you would need to pay to get your policy to last to any age you want it to.

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Feel free to download our CorpStrat Life Insurance Audit™ at corpstrat.com/life-insurance-audit.

If you have questions, or would like us to perform our free Life Insurance Audit™ on your life insurance policy, please feel free to contact us anytime.

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