can I close out my vul get my cash value and get a term policy without having to take another blood test?
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Asked April 29, 2013
A Variable Universal Life insurance policy is a type of permanent life insurance that has a cash value which can accrue value based on the performance of bonds, stocks, or other investment options chosen by the policyholder. When you apply for a VUL, you are usually required to take a medical exam, including a physical stress test and a blood sample. If you "trade in" your VUL for a term policy, the results of the medical exam are invalidated, and you may be required to take another complete exam.
The reason that life insurance companies require you to take a medical exam is so that they can determine the risk you pose for the policy, and how your premiums should be structured. If the results indicate that you have health issues, the insurance company may deny coverage or increase your rates, depending on the nature of the issues.
What happens more often with a VUL is that the cash value of the policy is borrowed against, leaving the policy intact. This allows you to make use of the money your policy has earned without having to find another life insurance policy to replace it. And since the only type of life insurance policy that never requires a medical exam is the very limited Funeral expense type, closing out your policy might create problems than it solves.
Term life insurance is much more limited than a VUL. The policy is only effective for the number of years specified in the policy, after which time you would either have to convert the policy to another permanent life policy, purchase or extend the term policy, or give up your insurance. And if your health has deteriorated since you took out the VUL to the point where a blood test could turn up problems that prevented you from getting coverage, it is really not a good idea to gamble with the future when you already have a working permanent policy in place.
Answered April 29, 2013 by Anonymous