Laura Berry is a former State Farm insurance producer and insurance expert.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent

UPDATED: Nov 3, 2021

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Don't miss these facts...

  • Life insurance is a unique concept because is allows the creation of an instant estate which can be paid for on the installment plan
  • Most life insurance policies are difficult to change because they are limited by the nature of the contract itself
  • Life insurance policies that can be changed are term life and universal life policies
  • Plan your life insurance estate like you’ll never change it, but make room for change when your life needs change


Life insurance is a unique concept that stands apart in its strength and by the economic safeguards it creates.

An individual can create an instant estate by simply putting up a fraction of the value of the estate, and then pay it out over a lifetime. All the while, there is an ironclad contract that is strictly for the person who set it all up.

If the person dies early in life, the entire amount of the estate is paid immediately to the named person or entity of the founder’s choice.

This is called a beneficiary. If the person lives to an older age, the estate has accumulated enough cash to become a significant sum which will help in the person’s retirement.

This is the description of a whole life policy which performs exactly in that manner and is backed by some of the most successful and wealthy companies in the world.

The insured individual has a contract that is unilateral, which means that the insurance company cannot just arbitrarily cancel the contract.

As long as the insured pays premiums required by the contract, the contract remains effective. The insured can terminate the contract at any time, but the life insurance company cannot.

Learn more about life insurance below and make sure to use our free insurance comparison tool above! Just enter our zip code and start comparing rates today!

How Does Life Insurance Work?

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Life insurance operates from the principle of the “Law of Large Numbers.”

The law of large numbers states that the larger the pool of people, the more accurately the incidence of loss will be able to be predicted. Another way of saying it, the more people who are insured, the better the chances are of offsetting claims with new premiums.

Another way of saying it, the more people who are insured, the better the chances are of offsetting claims with new premiums.

So, if a life insurance company has 5 million policyholders, all of the different ages, it is a certainty that they are not all going to die at the same time.

It is possible with mortality tables to predict the number of people who are likely to die in a given year, and from that statistic the company calculates premiums.

This is why the contract is so preferential in favor of the insured and the companies are so strong because there is a tremendous amount of money that the life insurance company collects and places into reserves against future claims.

Life insurance is cheaper the earlier in your life that you buy a policy.

Once issued and placed in effect, that price, or premium that is charged in order to keep the policy in effect does not increase.

If an individual purchases a policy at age 32, the rates for age 32 are the limit as to what is charged in the future. He or she will pay age 32 rates for as long as that policy is in effect.

That speaks to the stability of the concept, where people can get their coverage, and the price will remain constant as long as the policy exists.

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Can my Life Insurance Policy be Changed?

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Issues with life change and so do the needs for life insurance coverage. The format of changing a policy depends on the type of policy that is in existence when a change is desired.

For the most part, a change in a person’s life insurance would be brought about by the addition of a new policy or the cancellation of an old one.

Two exceptions to that premise are the ownership of term life insurance and universal life insurance.

  1. Term Life Insurance – If a term life insurance policy is convertible term it can be switched from term to permanent coverage.
  2. Universal Life Insurance – A universal life insurance policy allows the change of the face amount and the premium amount.

Key Factors to Consider When Making Changes With Life Insurance

  • The current status of the health of an individual is a key factor. If the current person is uninsurable, it would be foolish to drop any life insurance. If any kind of physical change of policies is being contemplated, it is always advised to get a firm underwriting analysis from the insurance
  • Sometimes policy replacement is a good fit for a change in life insurance. This process would involve purchasing a new life insurance contract to replace a current policy which would be dropped when the new policy is approved. The only reason this would be contemplated would be if the existing policy would have been very inferior as far as cash value growth or company service relationships.
  • In some cases, a life insurance policy could have the face amount reduced if for some reason if the need for insurance has decreased. There may be budgeting concerns, a new mortgage for less money, and a host of other concerns. Whether or not this type of change would be allowed will depend on the life insurance company and its rules.

Scenarios of Change As Far As a Life Insurance Policy is Concerned

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Life insurance can be a very flexible vehicle that can accommodate changing conditions in a person’s life situation. A perfect example would be an instance where an individual purchased an equity index universal life policy.

An equity indexed policy such as this has the potential of accumulating a lot of cash.

The mechanism that determines how this growth of cash is determined is an index, such as the S&P, which is a common stock index.

When the index rises, the cash values of the policy go up. When the index remains the same or goes down, the cash value level remains the same.

Say, for example, the applicant purchased the policy at a minimum premium, as when he purchased the policy, his budget allowed only so much towards this expenditure.

Then as some time passed, he was able to put more cash into the policy. Keeping in mind that the indexed universal type of policy has room for lots of cash accumulation on a tax-deferred basis, makes it very attractive for retirement.

Now the policy owner can put in quite a bit of cash to the IEUL policy and be able to fund an attractive vehicle toward retirement.

In this case, the change occurred in the cash value accumulation area. If a change in the death benefit amount is desired, then the policyholder would have to qualify from a health standpoint to raise the death benefit.

In Conclusion

For the most part, life insurance policies are rooted in stone and are difficult to change very much, once they are issued and in force.

The exceptions are term life and universal life insurance. Most changes in additional coverage are simply accomplished with the addition of more policies.

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