Actually, does not happen much in the real world. If you are 7 years into a 20 year term, you can't merely "swap out" for a better deal. You are thinking of this like car insurance, you are forgetting about underwriting with regards to health changes, actuarial tables, etc. A car is just a car, so it is apples to apples, not so with life insurance. FWIW, 96% of all term insurance policies end without paying out. Insurers LOVE writing term, it's like free money, particularly for young healthy folks. It is true whole life policies are much more expensive, but the insurer is on the hook for your "whole life"......
Why would you think you have to keep a term life insurance policy for its full term and not pick up another that's cheaper? I swapped out of (guaranteed renewable/convertible level term) life insurance policies about every three years or so myself when another opportunity for a cheaper/better policy came along (you know they always come along). You should receive an annual pricing chart showing when you'll be going up in the new policy (the heavier hit is @ 45, 55), so you can determine if the cost now and in the future is worth the swap. You're only "stuck" with your old policy if you're in poor health.
You can also cut your insurance costs if you no longer need as "much" life insurance as you needed when you were younger.
These are the reasons your independent agent usually makes a trip out to see you when your current policy expires (he's not a company agent - he's independent).
Remember - term life insurance is a hedge against your life - you never want it to pay out! You hope to be somewhat financially well off later in life to not carry it (the reason why the majority of people let it lapse, and don't renew it).
Whole life on the other hand, is a contract "for life" - for you to have any chance at getting any of your hard earned money back from having paid "extra" in premiums your whole life - you need it to pay out! (Even then, you have to subtract the cash value from the face value, and you have to die.) They should really call it "Death Insurance"...
Dave Ramsey is good at many things, but understanding insurance is not one of them...........
Has a decent radio show, but don't really follow "debt free" Dave...
I doubt most of any on here have a whole life policy. Permanent life insurance works very well for very wealthy individuals, because they can transfer wealth efficiently. Multi-millionaires are some of the biggest purchasers of permanent insurance in the world. They are not doing it because they are inept.........
But "Death Insurance" is not a great idea for 99% of the rest of us (previously implied as inept)... Now who's being inept
Based on your premise, you should get rid of your homeowners insurance when your house is paid off, get rid of your car insurance when it is paid off, etc.
No - never implied that - you have. Life insurance is entirely different than auto and home insurance. You may not always need life insurance (and congratulations goes with that scenario), but you'll always want auto and home insurance while you own either of them (defensible action protection, and wealth insurance).
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