Life Insurance Reconsideration And Reapplication: How To Lower Your Premiums
When you apply for insurance, the rate you’re offered may be higher than what you were initially quoted. This usually happens because of a medical issue uncovered during your underwriting, leading to a modified insurance offer. If your offered rate is too expensive, you have two options to lower it: ask your insurer for reconsideration or reapply for a new insurance policy with another company.
In this guide, we’ll discuss everything you need to know about life insurance reconsideration and reapplication. We’ll explain in-depth when these options are appropriate, as well as what you need to prepare beforehand. We’ll also share some tips to reduce your insurance premiums without reconsidering or reapplying for your insurance.
What Is Life Insurance Reconsideration?
Life insurance reconsideration means that you’re asking your insurer to examine your updated medical records with the goal of lowering your insurance rate. Once the insurer has taken a look at your new medical records, they’ll put you through the underwriting process again to ensure that your health improvements warrant a rate reduction.
Insurers usually offer reconsideration after your policy has been active for one or two years. You can’t ask for reconsideration directly after your initial policy offer because the insurer needs proof of a sustained effort to maintain your health.
Why You Should Apply For Life Insurance Reconsideration
People typically ask for a policy reconsideration because of health issues discovered during the underwriting process. For example, you may be offered expensive insurance rates because the medical exam uncovers that you have issues with high blood pressure. By having the insurer reconsider your policy after you’ve shown a successful effort to keep your blood pressure in check, you may be offered a lower rate.
Preparing For Insurance Reconsideration
Typically, you need to wait one or two years before you can ask for reconsideration of your policy. To increase your chances of being offered lower rates, here are some things that you can do to prepare in the meantime.
Improve Your Physical Health
To consider reducing your premiums, insurers will want proof that you’ve made positive progress on your health during the past year. For example, if you were offered high rates because of diabetes, you need to show that you’ve been taking steps to regulate your blood sugar levels. In addition to a new medical exam, the insurer will also need updated medical records that show you’ve sustained this lower blood sugar level for the past year.
Quit Your Smoking Habit
Insurance companies charge smokers much higher rates compared to nonsmokers. Usually, it’ll take five years of not smoking for insurers to consider you as a nonsmoker. While applying for reconsideration one year after quitting smoking won’t make too much of an impact on your insurance rates, you’ll be more likely to be offered lower rates the longer you go without smoking.
What Is Life Insurance Reapplication?
Another option to lower your rates is life insurance reapplication. Simply put, reapplication is the process of applying for a new insurance policy. An important thing to keep in mind if you’re reapplying for insurance is that you need to cancel your current policy so you don’t pay two premiums at once.
Why Reapply For Insurance
You may be given higher insurance rates due to health issues or other risk factors. In some circumstances, you can be denied coverage entirely. Usually, people reapply for insurance because another company provides more affordable coverage or their first choice of insurer declines to cover them.
How To Cancel Your Previous Insurance Policy
To avoid paying premiums twice, be sure to cancel your previous insurance policy before your new one comes into effect. In order to ensure that you don’t have a gap in your insurance, be sure that your old policy is canceled after your new one activates.
Depending on your policy type, here is how you can cancel your insurance policy.
Term Life Insurance
If your previous policy is term life insurance, you can send a written notice of cancellation to your insurer. Alternatively, you can simply stop paying premiums and let the policy be canceled by the insurance company.
Whole Life Insurance
If you have permanent life insurance, you’ll be provided with three options:
- Cash out your policy and receive the surrender value. However, doing this early on in your policy’s coverage period may result in numerous fees and penalties.
- Opt for reduced paid-up coverage. With this type of coverage, you can still retain a reduced death benefit even if you don’t pay premiums anymore.
- Lapse your policy by not paying premiums.
Tips To Lower Your Premiums Without Reconsidering Or Reapplying
While reconsideration and reapplication can lead to more affordable insurance rates, they are long-term solutions. If you need to reduce your insurance rates quicker, here are some steps you can try.
Reduce Your Policy’s Face Value And Term Length
Your insurance policy’s coverage amount and period are directly tied to your premium costs. If you reduce your death benefit or insurance term, you may be offered more affordable premiums by the insurer.
While you’re still paying more money for less coverage compared to your healthier peers, you’re still getting a more affordable rate that might fit your budget better.
Pay Your Premiums Annually
If you can afford it, consider paying your premiums in an annual lump sum. Typically, insurers offer discounts for annual payments, allowing you up to 8% of savings.
Consult An Independent Insurance Agent
By making use of an independent insurance agent’s expertise, you’ll have a better time navigating the insurance world. These agents can help provide solutions to lowering premiums tailored to your current financial situation.
Closing Thoughts
Sometimes, insurers may offer you higher premiums than expected. If you decide to take the policy and would like to lower your premiums in the future, you can either ask the insurer for reconsideration or reapply for a new policy elsewhere. In addition to that, you can also modify your coverage amount and period in your existing policy to lower your costs.
If you’re confused about whether to reapply or reconsider your insurance policy, Wesley Insurance, LLC is here to help! Our team of professionals can examine your current policy and suggest the best course of action so you can have insurance protection at the best value. Contact us today for more information!