Q. What considerations I should take before replacing a current life insurance policy with a new one?
A. The following questions should be asked before any replacement of an existing life insurance policy:
A. The following questions should be asked before any replacement of an existing life insurance policy:
- Is there a potential taxable gain if the current policy is replaced?
- What are the differences in the plans of insurance?
- What riders do the current and proposed policies include?
- How long is the initial death benefit guaranteed to be in force at the illustrated premium for both the current and proposed policies?
- What premium is necessary to guarantee coverage at initial/current levels for life in both the current and proposed policies?
- What are the financial strength ratings of both the current and proposed insurers?
- If the proposed policy is a variable life policy, what gross yield rate is being assumed?
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