|Question: Should I replace my permanent life insurance policy with another if I'm unhappy with the rate of return I'm getting?|
Life insurance is like other property in that sometimes it may be in your best interest to replace one life insurance policy with another. It may be that the type of policy you own is no longer the best for your situation (e.g., you own a traditional whole life policy and think that a variable life policy will better meet your needs). Or, your universal life policy is not paying as high an interest rate as other policies are paying. Perhaps a new variable life policy has more investment options or other new features that you find appealing. It may be that you have a small permanent policy and want to increase your coverage; perhaps you should combine all of your coverage into one new policy. Before replacing one permanent policy with another, consider these questions:
Since life insurance agents and brokers are compensated when you buy a new policy, you could be the victim of an unscrupulous salesperson trying to sell you a product that would not be better than what you have. On the other hand, the life insurance industry is constantly evolving with "new and improved" policy offerings. Do not be afraid to consider replacing your life insurance policy, but do so cautiously.
A life insurance policy is unlike other properties in that once you give up a life insurance policy, you may not be able to replace it at any price. Consequently, before replacing any life insurance, make sure that the new policy is delivered and paid for.