What Is A Carrying Charge On A Life Insurance Policy?

By Patrick Cooper Posted in Life Insurance News



When you purchase a life insurance policy you sign a contract that outlines the specifications of the insurance plan. This includes the amount of coverage, the effective period of coverage, and the premium price. Although by purchasing the life insurance plan you are entering a legal contract, you do have the ability to alter different aspects of the plan. A change of plan provision is included in insurance policies to allow the policyholder to alter the type of insurance.

Altering Your Life Insurance Policy Will Bring About Additional Fees

If you decide that you want to have more life insurance coverage under your current policy you can use the change of plan provision to move up to a better plan. Moving to a plan with more insurance coverage will have a higher premium. Along with having to pay higher premiums, the insurance company will most likely charge you various fees for changing the type of insurance plan. A common fee that insurance providers usually charge is what is known as a carry charge.

A carrying charge is a fee applied when a policy holder moves from an insurance plan of lower coverage to one of higher insurance coverage. When this occurs the insurance company requires the policyholder to pay a percentage of the monetary difference between the insurance policy of lower coverage and the new policy of higher coverage. The carrying charge is typically between three to five percent of the monetary difference.

When you buy a life insurance policy it is important that you do your research and purchase a plan with the right amount of coverage for you. Although it is possible to change the amount of coverage on your policy, you will incur additional fees by doing so. Likewise, buying a plan with too much coverage will force you to pay unnecessarily high premiums.

Related posts:

  1. What Is A Change Of Plan Provision In A Life Insurance Policy?
  2. What Is A Dangerous Activity Provision In A Life Insurance Policy?
  3. What Are Life Insurance Policy Exclusions?
  4. What Does An Ownership Clause Mean In A Life Insurance Policy?
  5. What Is A Tax Free Death Benefit For Life Insurance?






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