08 Aug My term policy is ending. Should I extend the policy?

Q. I have a term policy that’s coming to an end. I will have the option of extending it but the premiums are crazy high. I do have diabetes and had a minor stroke three years ago. Would it be worth it instead of looking for a new policy given my health issues?
— Mom

A. We’re glad you’re considering your life insurance situation.

Your situation is quite common as all term policies eventually have an end to their “term” period, which is the number of years your rates were guaranteed to be level.

Most people do allow their policies to lapse, said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.

Let’s look at your options.

Gaelick said if you’re healthy, you can shop the open market and replace your policy with one that’s new. That may be with a new insurance company or even the same, he said.

“While you’ll be older and the insurance cost higher at that point, that can be your best option,” he said. “You’d need to go thru complete underwriting meaning you’d need to prove insurability.”

But if you are not so healthy, underwriting may prove to be a roadblock to getting new coverage, he said.

He said diabetes specifically can prevent you from getting new coverage but that would depend on the type (I or II), the onset date, medication, insulin, diet, build (height/weight), complications and more.

Same with a stroke.

He asks what you mean by “minor.” For example. was there any permanent damage? Do you have any restrictions and/or limitations? What caused the stroke? Are you being treated or taking medication to make sure it doesn’t happen again?

All that can matter when it comes to insurance.

He said when you factor in both of your health challenges, you might find it hard to get a new policy, or at least one at a reasonable cost.

“It’s worth exploring before you decide to renew at the higher premium,’ he said.

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This story was originally published on Aug. 8, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.