You may run into situations where you already have an old Whole life insurance policy and are thinking about getting another Whole life policy for yourself. Does it make sense to exchange the policy for a new policy or buy another policy altogether?

When you purchase a new Whole life policy, there are many costs associated with setting up a policy regardless of the insurance company. Insurance companies have the most risk during the initial years of the policy if they have to pay out the death benefit early. As a result most part of the premium in initial years goes towards the death benefit with little going towards the cash value.

It is possible that either a policy was set up for you by your parents or grandparents or you set up the initial policy when you were young. In this case, it is better to leave the old policy intact as most expenses are paid off and to avoid disturbing the compounding effect. It is better to set up a new policy which can allow you to put in cash as you please.

Policy design is an important aspect of setting up a new policy. If the policy is designed correctly it will allow you to increase or decrease the total premium outlay as you wish and thus no need to set up an additional policy down the road.