5 Points Before Replacing an Existing Life Insurance PolicyReplacing a life insurance policy is not always the best thing to do.
1. A newer policy has most of the expenses being paid for in the first years. If you replace it with a new one, you'll be paying those expenses all over again.
2. If you use the cash value that accrued, it will not be as large as you expect because of surrender charges.
3. If your health has changed your premiums will probably be higher.
4. Your premiums will be higher because you are older.
5. Taxes will be owed on any cash value that exceeds the new premiums being paid. A 1035 exchange does not eliminate taxable income if there is a taxable gain and an outstanding policy loan at time of surrender.
Consider other options like: - a Reduced Paid-up rider- laddering with additional policies.
Whatever you decide, DO NOT terminate your existing policy until your new policy has been issued?