If someone pays into life insurance for 20+ years, is it possible for their policy maximum to decrease?
Say someone starts paying into their life insurance policy when they’re 49, is there a possibility that as they grow older the amount the company covers decreases. Or is it normal for an insurance company to keep the original policy amount agreed on throughout their lifetime until they pass, as long as they pay into it without missing any installments? Just trying to "get" this life insurance thing…
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August 10th, 2010 at 12:19 pm
It depends upon the type of policy and its terms. Term insurance can increase in cost and/or decrease in coverage amount for that cost as you get older. Whole life insurance would typically stay constant (although, the amount of premium going towards cash value will decrease as the part going towards insurance increases). But in one case when my insurance company was bought out, the new company gave me 60% more insurance for the same price.
August 10th, 2010 at 12:19 pm
To answer your question, it is possible. A decreasing term policy is set up to decrease a specified amount and specified intervals, even while you’re paying into the policy.
August 10th, 2010 at 12:19 pm
Yes, it is possibly if it is declining-benefit term insurance. It depends on the specific type of policy.
Go to Yahoo Finance, click on "Personal Finance" and read the section on life insurance.
August 10th, 2010 at 12:19 pm
It will all be written into the contract. Only certain types of policies are written this way. The majority of policies that I see now are usually level policy amount, but depending on the product type the premiums may increase due to your age. Best to pull out your policy and contact the agent to have them give you another overview of it. This wouldn’t cost you anything and you would better understand your policy. Also they have the ability to run illustrations showing how your policy should look going forward in future years.