Term life insurance is often chosen by individuals seeking affordable protection for a specific period.
However, as life circumstances change, policyholders may find that their current term life insurance coverage no longer aligns with their needs. Fortunately, there are several ways to modify the coverage. Here are five ways to consider.
1. Convert term policy to a permanent life policy
The first option is to convert a term life insurance policy to a permanent life insurance policy.
A permanent policy, such as whole life or universal life insurance, offers coverage for the entire lifespan of the policyholder and has a cash value component that grows over time.
Converting a term life insurance policy to a permanent policy can provide more extensive long-term coverage and financial benefits. However, it may come with higher premiums, and one should consider their budget before switching.
2. Decrease coverage
Another option for changing term life insurance coverage is to decrease the coverage amount.
If a policyholder’s financial situation has changed, and they no longer require as much coverage as before, decreasing coverage can help reduce premiums. Reviewing coverage regularly is important to ensure the policyholder pays for only what is necessary.
3. Add riders
Adding riders to the policy is a third option for changing term life insurance coverage. Riders are additional provisions that policyholders can add to their life insurance policy to tailor their coverage, when available.
A critical illness rider can provide extra benefits if the policyholder is diagnosed with a severe illness, such as cancer or a heart attack. A disability income rider can offer monthly income if the policyholder becomes disabled and cannot work.
Riders can improve coverage and provide additional protection for the policyholder and their family.
4. Extend coverage period
If a current term life insurance policy is set to expire, but coverage is still needed, policyholders may be able to extend the coverage period.
Some policies can renew for a specific number of years or convert to a permanent policy. It’s crucial to review policy renewal and conversion options to ensure adequate coverage.
5. Purchase additional coverage
Lastly, if the current coverage amount is no longer adequate, purchasing additional coverage is an option, and tools like a term life insurance calculator can help.
This can be especially important if significant life changes, such as marriage, children, or home purchases, have occurred. By purchasing additional coverage, policyholders
can ensure that their loved ones are financially protected if something happens to them.
Factors to consider when changing coverage
Before modifying term life insurance coverage, it’s essential to consider current financial situations and future needs. Factors to consider include:
- current and future income and expenses
- debts and liabilities
- dependents and their needs
- retirement goals
- estate planning goals
By considering these factors, policyholders can determine if their current coverage is sufficient or if changes need to be made to provide better protection for themselves and their loved ones.
While term life insurance offers valuable protection, policyholders should review their coverage regularly to ensure it meets their needs.
Whether converting to a permanent policy, decreasing coverage, adding riders, extending coverage periods, or purchasing additional coverage, options are available to customize the coverage to provide the additional financial protection.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Life – 68000 Series – In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term/Whole Life – B60000 Series – In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life – Q60000 Series – In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Group Term Life Q60000 Series – In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Aflac insurance coverage is underwritten by Aflac. In New York, coverage underwritten by Aflac New York.
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