Life insurance provides financial security for the loss of a spouse, friend or relative. Although it might seem like a blessing at first, most people don’t consider insurance until it’s too late or their loved one is gone.
Once you have been hit with the reality of covering the costs of the loss of a person you love, it becomes pronounced that insurance is no longer an asset providing financial security but a burden that you have to bear for the rest of your life. However, there are ways to get rid of insurance sooner than later. Here are five tips for getting rid of insurance sooner rather than later.
Know What You’re Insured Against
Before buying a single policy, you should know precisely what you’re insuring against. What are the benefits that you are receiving from your life insurance policy?
If you’re only thinking about the coverage amount, you’re probably wasting your money and overpaying. Unfortunately, most people don’t understand the difference between a death benefit and an amount of coverage. Many people believe that a death benefit is an amount that the insurance company will pay out upon the policy owner’s death.
The death benefit is merely the amount that the insurance company will pay out if you die without a beneficiary. The coverage amount is the exact amount that you are paying. It’s essential to understand the difference between the death benefit and the coverage amount. If you’re not sure, you can always call your agent and ask them what the coverage amount is.
Play the Odds
If your current policy has a death benefit of $100,000 and your odds of dying in the next 10 years are 1 in 10,000, you are likely paying $10,000 per year for coverage that you are unlikely to receive.
Rather than renewing your policy, why not try a new one with a death benefit of $100,000, is guaranteed to pay out that amount, and is paying $100 per year? This is a play on insurance odds and a simple change that can significantly reduce the amount of coverage you need.
Make a Change
There are many ways to reduce the amount of coverage you need drastically. In addition to playing the odds and changing your policy, you can also make changes to your beneficiaries and your estate planning to reduce the amount of coverage you need.
However, it’s important to note that these steps are only necessary if you do not own a home and do not have children who will inherit your estate. If you do have a home and children, you can likely reduce the amount of coverage you need by taking one or more of these steps.
Talk to Your Agent
Many people don’t talk to their insurance agent about their coverage because they assume it’s too late to get rid of insurance. This couldn’t be further from the truth. It’s essential to open a dialogue with your insurance agent about your coverage.
Your agent can help you understand what coverage you need, what level of coverage you have, and how to get rid of insurance sooner rather than later. It’s also important to mention whether or not you think you may want to cancel your policy in the future.
This can help your agent determine whether or not they should recommend increasing coverage or decreasing coverage to you.
Get an Estimate
Before you get rid of your life insurance policy, it’s essential to get a quote and see how much it would cost if you decided to cancel your policy.
This lets you make sure that cancelling your policy is financially viable and not just a romantic dream. After cancelling your policy, you can compare the cost of your current approach to the price of a new one to determine whether or not you made the right decision.
It’s important to remember that cancelling a policy can be expensive. You can expect to pay a cancellation premium of around 10%. You can expect to pay the difference between your current coverage and the amount you would pay for replacement coverage.
If you have been paying into life insurance for years and finally reached the point where you can’t afford to pay for it anymore, don’t waste another second.
You can get rid of life insurance sooner than later by making a few simple changes to your coverage, such as knowing what you are insured against, playing the odds, making a change, talking to your agent, getting an estimate, and comparing the cost of your current policy to a new one.