How to get better life insurance rates after you buy a policy
If you already own life insurance, you may think your life insurance rate is set in stone. Think again. You might not realize that your premium can decrease if you meet certain guidelines for reconsideration. If you can show significant health improvements that you have sustained for a substantial period of time, you might qualify for a price that is lower than what you are currently paying – even though you’ll also be priced at your higher age.
Requesting an evaluation of your current life insurance premium is a good idea if your health has significantly improved since the policy went into effect. Improvements that can lead to better life insurance rates include healthy blood pressure readings, improved cholesterol values, improved liver function and sustained weight loss, among others.
"If you currently own a life insurance policy and certain factors of your health have significantly improved -- for example, you've overcome a chronic illness, stopped smoking or lost a substantial amount of weight -- it makes sense to review your policy with your insurance agent to see if you qualify for lower premiums," says Marvin H. Feldman, president and CEO of the Life and Health Insurance Foundation for Education (LIFE).
Your timing for requesting a reevaluation is important. Most policies will be eligible for reevaluation after they have been in force for a year. However, smokers will generally need to be nicotine-free longer before they will be eligible for a policy rate review – anywhere from two to five years, depending on the insurance company.
If you think your chances of obtaining a better life insurance price are good, what's the next step?
"My advice would be to discuss the situation with your agent," says Lynn Patterson, Chief Life Underwriter, Alternative and Strategic Distribution, for ING. "Have any updated medical information available for review. Your agent will then have a solid basis on which to request a reevaluation, as well as learn the best rating that would be available given this information. He or she would also be able to advise you if any additional requirements would be necessary."
How to prepare for a life insurance rate reevaluation
If your agent agrees that it's time for a reevaluation, you’ll be required to undergo a new medical exam. The LIFE Foundation offers some tips for the exam, which may help you secure the lower life insurance rates you’re after:
- Don't smoke for three hours before your exam. Smoking tends to constrict artery walls and can elevate your blood pressure.
- Don't drink any alcohol for 48 hours before your exam. Alcohol can elevate your blood pressure and adversely affect your blood test.
- Limit caffeine consumption for 48 hours before your exam. Caffeine can elevate your blood pressure and increase your pulse rate.
- Bring a list of medications you take. It can be cross-checked with your blood test results.
- Don't exercise the day before your exam. Exercise, especially cardiovascular workouts, can cause inaccurate elevations in cholesterol levels.
- Fast for 12 hours before the exam. Some foods and beverages can adversely affect your blood or urine tests. It may sound crazy, but a poppy seed bagel can make your blood test come back positive for opium.
- Schedule the exam at a time when you'll be relaxed. Avoid scheduling the exam at a hectic time of the day because the more relaxed you are, the better your chances of getting a lower blood pressure reading.
Can it backfire?
If a life insurance reevaluation finds that you don't qualify for a reduction of rates, at least you tried to save money. Even if the results of your medical test are disappointing, you won’t be hit with a higher life insurance price – you will continue to pay the rate for the original policy.
However, there are very rare cases in which a life insurance reevaluation could backfire -- specifically, if the reevaluation reveals that you lied on the application for your original policy.
"If the policy is still within the two-year contestability period, and the underwriter learns of new information that was materially misrepresented at the time of the original underwriting, then a rescission action may result," Patterson says.
No luck. Now what?
If you feel you had valid reasons to ask for a reconsideration but were denied a lower premium, there is some recourse. Keep in mind that, ultimately, life insurance companies are competing against one another for your business.
"The reason insurers offer reconsideration in these types of cases is for competitive purposes," Patterson explains. "They do not want to lose customers who have significantly improved their health to other carriers who will take them at a more favorable premium."
If you disagree with a reevaluation denial, perhaps it's time to look elsewhere.
"If you feel the company's response is unacceptable, ask the agent to shop the market with a special risk broker to determine if another company may offer a more favorable rate," Feldman suggests. Here’s more about impaired-risk specialists.
Patterson agrees. He says that while a policyholder can appeal a company’s decision to a higher person in the underwriting department, it’s more common that the customer to changes life insurance companies in order to get a better price.