Broker Check

Give your life Insurance a checkup

July 10, 2015

Every so often there are a few tasks that you don’t really want to do but you know once they are done you’re so glad you did like going to the dentist.  Updating your life insurance is one of those things.  The good news is it can save you money.

Reviewing your life insurance should be done every three to five years and each time you have a change in income, debt, marriage or dependents.  If your health has improved or your needs have changed you often save money but you save without those changes.

Life insurance companies make money by managing risks through statistics.  The more information an insurance company has, the better they get at managing the risks.  The better they are at managing risks the more they can lower their rates.  They want to lower their rates to get more business.  This helps them grow the business.  The bigger the company is the more diversified their financial risks and the more stable and profitable they become.

If a life insurance company finds that people who eat jelly beans while standing are 10 times more likely to die of a heart attack before they turn 60 than people who eat them while sitting down, they can build that fact into their statistics.  They begin to ask new applicants if they sit or stand when eating jelly beans.  People that sit can get a lower cost policy and people that stand may have to pay more.  If you sit you may save money by applying for a new policy.  If you stand you keep the policy you have.  There is no risk of it costing you more.

Insurance companies update their statistics constantly and therefore update the costs of their policies and the information that they use to determine what class an applicant would fit into.  When a company has learned new information that can help you, you may benefit from the new statistics.  Have someone shop around for you who know the details of what different companies are looking for.  If you find that there is a better rate out there you may want to switch.  Be sure that the safety and stability of the new company are comparable or better than what you have.  You also need to be sure that you will not have a lapse in coverage between the end of the old policy and the beginning of the new.  Be sure to reassess your needs and coverage amounts and if you would be giving up benefits of the old policy that you would not get with the new as well.