Can I Increase or Decrease My Life Insurance Coverage?

4 min read

Remote work, living room and black man with paperwork for insurance, investment of home financial.

The only sure thing in life is uncertainty. So, as life circumstances change, your life insurance should follow suit. It's important to understand your options when it comes to upgrading or downgrading your insurance in order to stay protected and make sure you have the appropriate amount of coverage at every stage of life.

Why Adjust Your Life Insurance Coverage?

Life throws us curveballs all the time—some exciting, some ... not so much. Here are a few key moments that could signal that your life insurance policy needs attention:

When Family Dynamics Change

Going through a divorce? Recent empty nester? Either one can signal a coverage review and possible adjustment. A lower premium policy might make more sense now. (P.S. Stay tuned for tips on navigating life insurance during divorce.) On the flip side, if you’re expecting your family to grow you might consider increasing your coverage.

When Financial Priorities Shift

Is there any change on the horizon? Retiring in the near future or child starting college? Your life insurance should reflect your new game plan. You may want to reduce coverage or choose a policy that supports long-term goals, like leaving an inheritance or covering final expenses.

When You Change Jobs

With a new job comes new benefits. Many companies offer group life insurance, and the coverage amount is usually a multiple of the employee’s salary. The provided coverage amount may not be sufficient to meet your current and future financial needs. If that’s the case an individual policy that gives you more options might be a good idea. When you leave a job the company-provided policy will probably not have portability or will have conversion options that typically result in higher premiums and insufficient coverage. Considering a new policy is the perfect opportunity to shop around for rates and coverage that fit your current and future needs.

What Happens if You Modify Your Life Insurance Policy?

Adjusting the face amount or duration of your policy is fairly simple. But there are some things to consider, including:

Health Check: A medical exam or application questions are often required to set premiums depending on face amount and current age. You might need to do this again to change your coverage. As long as your age and or health hasn’t changed significantly, it’ll be a smooth process.
Cash Value Adjustments: For whole life policies, coverage changes could affect the cash value that’s built up. That means you may have more or less to borrow or use for future financial needs.
Premium Changes: Bigger policy? Bigger premium. Smaller policy? Likely smaller premium. Always check how changes will affect monthly costs.
Age Change: Any change since policy inception will have an increase affect on the premium regardless of health. The older you are, the more you will pay if all other things stay the same.

How to Change Your Life Insurance Policy

Start by contacting your life insurance company by phone, email or online portal. Here’s what to expect depending on whether you want to increase or decrease coverage:

If You Want to Increase Your Coverage

Add Riders: Riders are add-ons that provide extra benefits. For example, a waiver of premium rider protects you if you become totally disabled as defined in the rider and can no longer make payments on your policy. An accidental death rider pays an additional benefit to your beneficiaries if your death results from a covered accident.
Extend Your Term: If you need coverage for a longer period of time, you can extend the term of your term policy. This can be done by applying for 20 or 30 year coverage if you currently have 10 year level term or 30 year coverage if you have 20 year level term. Consider this if your financial responsibilities last longer than planned, like supporting dependents, college tuition or covering a mortgage.
Convert Term to Whole: If you’ve outgrown your term policy and want lifelong protection, you can exchange a term life policy to a whole life/permanent policy. Whole life/permanent policies provide permanent coverage as long as premiums are paid as well as build cash value over time.
Buy Supplemental Insurance: You can always add coverage with an additional policy, especially if your financial obligations have grown, like more dependents or larger debt. It can be either an additional life insurance policy or even an AD&D policy.

If You Want to Decrease Your Coverage

Lower the Death Benefit: If your mortgage is paid off or your children are financially independent, you may not need as much coverage. Lowering the death benefit will reduce premiums and ensure you're not paying for coverage you no longer need.
Consider Term Over Whole: Whole life policies are typically more expensive than Term. So, if long-term needs change, or you want to save on premiums, you might consider applying for a term policy (10, 20 or 30 years) instead.
Cancel Unnecessary Riders: You may have added riders that no longer apply—like a child rider or accidental death rider. Removing them will reduce premium payments.

Ready to Make a Change?

If you’d like to adjust your policy, Gerber Life is here to help. Contact Us or call 1-800-704-2180 to review your options. We’ll work with you to ensure your coverage matches your evolving needs.