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How to switch life insurance policies

Consider a new policy if your term policy ended or your lifestyle changed — but weigh the pros and cons.

You can switch life insurance policies if you need more coverage or lower premiums for your policy. However, you could pay more with a new policy or hand more tax responsibility to your loved ones. It’s worth researching and comparing your options — you might decide to add coverage or keep multiple policies instead.

Can I switch life insurance policies?

You can change your life insurance policy, but how to make the switch comes down to the type of policy, features and your goals, such as lower premiums or more coverage. Also, be aware that for the most part, switching actually involves canceling and opening a new policy.

1. Convert term life to permanent life

Your term life policy usually includes the option to convert your policy into permanent life insurance without having to take another medical exam. However, you’ll have to make the change within the conversion period specified by your insurer, such as by age 75.

  • Who it’s best for: Your term length isn’t long enough to meet your needs, you want lifelong coverage that builds savings and you can afford the higher costs of a permanent policy.
  • How to switch: Check your policy or ask your insurer if your term policy includes a conversion option. If you’re within your conversion period, such as 20 years of starting your term policy, your insurer should be able to walk you through next steps. Your new rate depends on the death benefit you choose, and your age at the time of converting.
  • Ladder multiple term policies. If your goal is to have your life insurance coverage last longer, you can purchase a separate term life insurance policy that lasts a longer period of time. For example, if you already have a 20-year policy and buy a 30-year mortgage, you could purchase a second 30-year term policy to cover the length of your mortgage.

2. Cancel annually renewable term life and get level term life

Canceling your annually renewable term policy (ART) to purchase a level term policy is as easy as not renewing your ART policy at the end of your term. An ART policy may make sense for short-term life insurance needs or when you’re young and healthy and want the cheapest rates. However, each time you renew your policy, your rates go up based on your new age — making an ART policy less valuable over time.

  • Who it’s best for: You want coverage that lasts a specified amount of time, a premium that stays the same for the length of your term and your ART policy is no longer your cheapest option based on your age.
  • How to switch: At the end of your one-year term, let your insurer know you are not renewing coverage. Compare level term quotes between your current insurer and other companies to score the best rates.
  • Decreasing term life insurance. If you want steady life insurance premiums over time, but don’t need a set coverage amount, you can opt for a decreasing term policy. This type of policy has the same premiums throughout your entire term, but the death benefit decreases over time.

3. Cancel permanent life for term life

Switching a permanent policy to a term policy isn’t as simple as converting your current policy into a new one. This option comes with drawbacks, like fees and you may find options within your permanent policy that can help you lower your monthly premiums without switching to a term policy.

  • Who it’s best for: You want to lower the cost of your life insurance and still want a death benefit for your beneficiaries for a set term.
  • How to switch: If your permanent policy has built up enough cash value, you may be able to use it to pay the premiums on a term life insurance policy for a specified amount of time. This is referred to as an extended-term option and if you have enough cash value built up, it may pay for premiums long enough to meet your needs.
  • Reduced-paid-up option. This means the cash value in your policy is converted into one large premium and is used to pay off a lower death benefit whole life policy. This way, you’ll no longer have to pay a monthly premium, but your death benefit will be worth less than before you made the change.
  • Surrender your policy. If you’ve built up enough cash value, you can surrender your policy and use some of the cash value to buy a separate term policy. However, your cash value is reduced by surrender fees and you may have to pay taxes on it.

How to switch life insurance policies

Once you’ve determined that you can switch your policy, the process is pretty straightforward. Here are the basic steps:

  1. Determine how much coverage you need. Take into account how much your loved ones need to live on, including any debt they’re responsible for. Then, subtract any savings, investments or other sources of income.
  2. Search for your new policy. The right policy for you offers the coverage and features you’re looking for and stays within your budget. For example, if you want a policy with the cheapest premiums and few features, you may look for term life.
  3. Buy a new policy before canceling. Most policies require a medical exam and approval process, so it’s best to wait until you receive official approval before canceling your old policy.
  4. Ask about your cash value. If you have a whole life policy, ask your agent how much cash value your policy has earned. If you decide to surrender your whole life policy, you may have access to this cash value but you’ll want to account for any surrender fees you may have to pay.
  5. Cancel your existing policy. Once your new policy is in place, cancel your existing policy. Your insurance agent will help you fill out the paperwork.

What info do I need to switch?

To switch your policy, expect to provide:

  • Current life insurance policy number
  • Current insurance company
  • Expiration of current policy
  • Up-to-date family medical history
  • Current lifestyle, career and hobbies
  • Personal contact information

When should I change life insurance policies?

You might want to replace your existing life insurance if:

  • Your term life policy is ending. You could buy a new term life policy at a higher premium, let it cancel without a replacement or roll it over to a permanent policy.
  • You’ve experienced major life changes. As you grow your family or you consider life after retirement, you may adjust your life insurance policy to meet the needs of your beneficiaries.
  • You can’t afford the premiums. If your premiums are too expensive as you get older and develop health issues, you may be looking to buy less life insurance.
  • You want to take advantage of tax benefits. You might set up a life insurance trust to bypass estate taxes or buy permanent life to help loved ones pay estate taxes.

    What to watch out for when switching life insurance

    You want to make sure that your replacement life insurance policy is worth the switch. Consider several factors to make an informed decision and find the best policy for you.

    • Cash value. If you’re switching between permanent life policies, compare your current cash value and whether the new policy will grow this value faster or slower. If it’s similar or slower, you may switch for reasons other than the cash value growth.
    • Premiums. Calculate your new policy’s commission, fees and any other upfront costs to make sure that it’s less expensive and offers competitive coverage versus your old policy.
    • Coverage. See if you’re getting the same or a higher death benefit, the amount that’s paid out to your loved ones. Consider the policy’s cost compared to its coverage to make sure it’s worth it.
    • Tax implications. Certain situations like naming grandchildren as beneficiaries or gaining profit from your cash value may affect taxes when the policy is paid out.
    • Waiting period. Often, there is a fairly long waiting period — about a year or two — before you can make a claim on your new policy, which could be a concern for some people.
    • Reputation. Do your research about the company’s financial stability, customer service reviews and its process for making a claim.

          Alternatives to switching life insurance

          If you only need higher coverage or cheaper premiums, look at a few options that don’t involve canceling your current life insurance.

          • Adjust your current policy. Ask your insurer if you can adjust your current policy to fit your needs instead of shopping for a new one. Some companies allow you to convert your term life insurance into a permanent policy.
          • Ask to reconsider your health. Some companies can re-evaluate your health status if your health has improved recently. You may need to re-take a medical exam, but it offers the chance to lower your rates based on your current health.

          Find a new life insurance company

          Name Product Issue age Minimum Coverage Maximum Coverage Term Lengths Medical Exam Required
          Policygenius - Life Insurance
          18 - 85 years old
          10, 15, 20, 25, 30 years
          Depends on provider and policy
          Compare 12+ top insurers side-by-side to get the best possible deal, and shop return of premium policies online.
          20 - 60 years old
          10, 15, 20, 25 or 30 years
          No, for coverage up to $3M
          Apply for term life insurance online without the medical exam. Get an instant decision and adjust your coverage at no charge.
          18 - 60 years old
          5, 10, 15, 20, 25 and 30 years
          Compare 40+ insurers and apply online to get the lowest possible price — no medical exam required.
          Everyday Life
          18 - 70
          10, 15, 20, 25, 30, 35 and 40 years.
          Ladder multiple life insurance policies to save on the coverage you need for all your debts.
          18 - 60 years old
          10, 15, 20, 25, 30 years
          Get a quote and apply.

          Compare up to 4 providers

          Bottom line

          If you’re considering changing your life insurance policy, you’ll want to pay attention to new coverage levels, costs and tax implications. Make sure you compare life insurance policies to get the right coverage for you.

          Frequently asked questions about replacing life insurance

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