What should be considered when replacing a life insurance policy?
A. Because the various states individually regulate insurance companies, the replacement of a life insurance policy will involve different procedures depending on the particular state. However, often the replacement decision is based on a computer illustration which may not be fully understood or completely accurate. In deciding whether or not to replace a life insurance policy, you should consider not only the strength of the new company as compared to the company which issued the existing policy, but also the true cost of the new policy because of additional costs for increased age, changes in health conditions, or differences in the types of policies. You should also be aware of the fact that new policies usually involve new start up costs because of the initial sales commission and that the policy will probably involve a new two-year suicide clause. You should also determine the impact of previous dividends and cash value growth, which may be more favorable with the older policy be
