How to Manage Life Insurance Coverage as You Grow Older

Eliminating or Reducing Term Coverage
1.Stop making premium payments on any term coverage that is no longer necessary for your designated beneficiary.
2.Reduce the death benefit of a policy if some coverage is still needed.
3.Call the customer service department of the insurance company's home office and ask for the necessary forms to effect either change. 
Redirect cash flow from premiums to debt payoff or to savings and investments.
Reducing coverage should result in significantly lower premiums. 
Don't eliminate coverage if there is still a need to provide a lump sum payment at your death to cover final expenses.
Changes in the death benefit will probably not be allowed to take place until the next policy anniversary date.
There may be a minimum amount of coverage below which an insurance company will not allow further reductions in the death benefit.
Premiums not paid before the end of the grace period will cause a term policy to lapse, and reinstatement of the death benefit may not be possible. 
Maintaining Coverage With No Further Premium Payments

4.Find the insurance policies (and latest annual statements) on which you are still paying premiums and for which you are the owner.
5.Separate term policies from permanent policies (ones with cash values), and set the term policies aside.
6.Write down, on a separate piece of paper for each permanent policy, the name of the insurance company that issued the policy, the phone number of the company's home office, and the policy or contract number.
7.Call the customer service department of each insurance company and ask the representative to send you an "in-force policy illustration" showing the effect of no further premium payments.
8.Document your call, noting the date, time of day, full name of the person to whom you spoke, and his or her direct phone number or extension.
9.Call the customer service department again to discuss your options after you get the illustration in the mail.
1..Stop making premium payments if you determine that you no longer need the coverage or if you can keep some or all of the coverage in force with the cash values of the policy. 
Permanent life insurance policies may have enough cash values to allow you to reduce or eliminate premium payments altogether and redirect that money to other uses.
If you have a good relationship with a life insurance agent, get him or her to help you.
You may want to contact a certified financial planner (CFP) or other financial professional to direct your efforts. 
Don't stop making premium payments until you know exactly what effect such an action will have on the values of your policy over time.
An insurance company will not take the initiative to advise you that you no longer need to make premium payments to keep your policy in force.
Watch out for insurance scams that direct you to borrow against or "cash out" your policy to buy more insurance.
Flexible premium or universal policies may require additional premium payments if the interest rates drop or the returns of invested cash values decrease. 
Exercising the "Reduced Paid-Up Insurance Policy" Option or the "Paid-Up Term" Option if Available

1..Contact the customer service department at the home office and ask the representative to calculate a reduced paid-up insurance policy based on current policy values.
1..Factor the lower death benefit of such a policy into your retirement and estate planning.
1..Fill out the necessary forms to allow the company to issue you a new permanent policy.
1..Exercise the paid-up term Option if available. Determine if your policy provides a paid-up term option, and calculate how long the term coverage will actually last.
1..Choose this option if your insurance needs do not exceed the period of extended term coverage. 
A reduced paid-up policy option may be one of the guaranteed benefits of your whole life or universal life policy.
Choosing this option provides a lower guaranteed lifetime death benefit to your beneficiary and eliminates the need for further premium payments.
A paid-up term policy allows you to stop making premium payments, yet still provides a death benefit to your beneficiary. 
Reduced paid-up insurance policies do not have a cash value against which loans can be made.
Once chosen, this change is permanent and irreversible.
The death benefit of such a policy will be significantly lower than that of the original policy.
This option is not available for all permanent-type life insurance policies.
Loans against cash values may not allow such an option to be exercised until they are paid in whole or in part.
Paid-up term policies are permanent and irrevocable and provide no cash values.
Loans cannot be made on paid-up term policies.
Insurance coverage terminates at the end of the term and cannot be renewed or extended.   

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