When does it make sense to replace your existing disability insurance policy?
Before you replace your existing disability insurance policy, it is important to consider many variables. Qualifying for an individual disability insurance policy can be difficult so replacing it may not make much sense.
Never drop an existing disability policy before a new policy is in force, either. If you don’t qualify for the new policy or it comes back modified, you may be in a bind if you already cancelled an existing policy.
Here are the circumstances when you should NOT replace your policy:
1) You have had a significant change in health. Moving from a policy with no exclusions or limitations to replace with a policy that has limitations may not be in your best interest.
2) You have moved to a more expensive and restrictive state such as California or Florida.
3) You are significantly older than when you purchased your initial policy.
4) You are working in a riskier field or changed occupations. The riskier the occupation, the more expensive the plan.
Here are some examples when it may make sense to replace your existing policy:
1) There is a new policy that will save you significantly on premiums. This may be due to a discount or eligibility for a unisex rate, especially for women. If you can drop your rate by a significant amount, it may make sense to replace.
2) Your current policy has significant limitations. Perhaps you didn’t shop around initially when you purchased your policy and you now have a policy that doesn’t sufficiently cover your needs.
3) You have had a big change such as an increase in income, changed careers, etc…
4) Your current plan is on a graded scale that is becoming cost prohibitive. It may have seemed like a good idea at the time you purchased your policy years ago, but now your premiums are climbing every year and the cost to lock them in are too much.
5) You have a plan without guaranteed rates. You may want to replace it with a policy that has guaranteed rates to age 65.
6) Your policy came with limitations. Perhaps you carried with you a policy from your medical residency or an employer plan that had a lot of limitations.
7) You have an association policy where the rates are not guaranteed. Perhaps you purchased this plan early in your career and didn’t give it much thought until you reached the age of 40 or 50 and were sticker shocked at your new premium.
For more information about if you should replace an existing individual disability policy or to request a quote comparison, contact Set for Life Insurance today!