1. 21750 POINTS
    Jim WinklerPRO
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! First you sit down, because when your agent tells you how much higher your premium payment is going to be each month, you will be happy that you did. All you need to do is tell your agent that you want to renew. They will be happy to make that happen for you, because they are going to make a fat commission off of you. Expect your premium to rise roughly 110% each year that you renew it. Unless there is a health reason that precludes you from being able to get insurance, you are probably better off just getting a new policy altogether. I hope that helps, thanks for asking!
    Answered on August 5, 2014
  2. 7479 POINTS
    Steve KobrinPRO
    President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
    This one is easy to answer: do nothing.

    Yes, that’s right. Virtually all term policies these days are guaranteed renewable. This means that you will retain coverage without going through underwriting again.

    So when it renews, you will get a bill for the renewed rate. Or, if your policy is on automatic bank draft, the renewal rate will be deducted from your bank account.

    Next question: what will the renewal rate be?
    The thing is, you won’t know until the policy renews.

    You will note on the data page of your policy that guaranteed maximum renewal rates are illustrated. These numbers can be very scary because they represent worst-case scenario rate increases. The actual renewal rates are determined when the contract renews, not when it is issued.

    Fortunately, actual renewal rates typically don’t come close to these guaranteed maximum numbers. But they can be high. Once the premium guarantee period is over, the policy can renew at a rate much larger than the original premium. If the insurance carrier needs cash, or wants to bolster its reserves, or for any other reason wants more money, renewal term premiums are a good way to get it

    Is this bad? Is this good? It all depends.

    If the insured unfortunately has cancer, or some other very serious high risk factor, then even that high rate might seem like a bargain. If you still need life insurance, and you can’t qualify for a better deal elsewhere, then even if you pay much more money in premium, the death benefit can still be worth it.

    But if fortunately you are healthy and do not have high risk factors in your lifestyle, then you just might qualify for a better rate with another company. Go for it!

    Just make sure you get prequalified so you know before applying that the change would be in your favor. And very important: don’t drop your current policy until the new one is in force. You want to avoid a gap in coverage.
    Answered on August 17, 2015
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