Re-entry Premiums

After you have a term insurance plan for a number of years, some insurance companies allow you to reduce your premium if you can prove that you are still in good health (this is called re-entry). Typically, the re-entry premium is the same as the current premium until the tenth year. After the 10th year, the re-entry premium is lower. Re-entry generally requires you prove good health by submitting statements of health, medical records, or by taking a physical exam.

Insurance companies have lower re-entry premiums which reflect the lower mortality expense of healthy new applicants. Lower mortality occurs because applicants who buy new policies, or successfully re-enter a policy, must be in good health to receive the best rate. Conversely, an insured who is in year seven of his policy may have developed a serious illness. Since the insurance company must renew the policy regardless of health (on most plans), a new healthy client represents a better risk than the ill client who bought the policy seven years ago. That is why the re-entry price is lower than the renewal premium. If you currently have term life insurance (and have had it for at least 2 to 3 years), check to see if your company offers re-entry. If you can qualify, re-entry may save you thousands of dollars. If your current plan does not allow re-entry, you may want to get a quote and re-qualify at lower rates with another company. Before finalizing that decision you need to read the section on replacement.

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