What happens if you have qualified for
and purchased term life insurance but
your health significantly changes?
The good news is that the term life
insurance plans we quote on this
site (we cannot speak for other sites
out there) are guaranteed renewable.
Let's find out why this is so important
to the basic idea of life insurance
protection to begin with.
We get the question almost daily, "What
if my health changes...can they cancel
me?". We can quickly calm the
fears by letting them know that their
coverage is guaranteed renewable.
This means that as long as they pay
their premium on time according to the
policy requirements, the coverage cannot
be cancelled. It would defeat the
purpose of coverage to begin with if a
term life policy could be cancelled due to
health. Keep in mind that you have
to be in good health in order to qualify
to begin with.
only kink has to be do with the
contestability clause. The carrier
may be able to cancel the policy fraud
or misrepresentation of material (i.e.
important or having bearing on the
decision) information can be shown during the
application/enrollment process within
two years of the
life policy effective date.
This a strong reason to be honest and
complete when filling out the
application and during the enrollment
process. If you are honest and
forthright, you can then rest assured on
the the principle of guaranteed
only other issue is if the company
itself goes bankrupt. There are
two protections on this front.
First, we provide life insurance
companies ratings which guides you on
their ability to pay life insurance
benefits in the future. Secondly,
State guarantees funds designed to
protect you up to a certain level of
protection of guaranteed renewal extends
through the term or length of the
policy. By definition, this only
applies for your chosen term period with
term life insurance. For example,
if you apply for 10 years term, the coverage is only
guaranteed renewable for 10 years.
After this period, there may be options
to renew for a term life rate but not
subject to underwriting.
rates are primarily based on age at the
time of enrollment and guaranteed for
the chosen period of time. After
that period, you will likely pay quite a
bit more. This is why it's so
important to plan out how long a period
of coverage to choose up front at your
younger age. We have an entire
article on how to view this question.
can be increased for an entire class of
guaranteed renewable policies.
This means they can't target you for
your specific health status but can
change rates for everyone in a
demographical group. This is rare
with term life insurance and much more
common with health insurance (much to
the irritation of health insurance
key to guaranteed renewable is that your
responsibility is to pay the premium.
We strongly recommend an automatic
deduction in order to make sure the
policy doesn't lapse due to lack of
payment. Carriers may also have
grace periods to pay premium. It's
important to check your life policy or
with us as your licensed life insurance
servicing agent to know what the payment
grace period is. There may also be
re-instatement clauses that allow you to
re-instate a lapsed policy after paying
the back premiums. You never want
to be in this situation and in order to
keep your guaranteed renewable status,
make sure to abide by the policies
requirements for payment.