When Should You Drop Life Insurance? 
Generally , you want to have some form of coverage if you have a need for it . If you have a term insurance policy , you will generally drop it when the initial premium guarantee period expires - at this point , the policy would become annually renewable and the premium will increase each year by a substantial amount -LRB- based on age -RRB- . People will generally replace an expiring term insurance policy with a new term policy or a permanent policy . If you have a permanent policy , you 're generally keeping it for life - that 's why you bought a PERMANENT policy . However , there are many situations why people `` drop '' these policies . A common one is because they may be able to secure a lower premium , better guarantees , and/or better cash value build-up . When people change from one permanent policy to another , they may do a 1035 exchange/rollover to reduce the premiums they 're paying each month -LRB- this is done by taking the cash value from the old policy and using it towards the first year 's premium on the new policy . A lot of people tend to drop their coverage because they ca n't afford the premiums . Many programs allow you to reduce the face amount of the policy to reduce the premiums - so you do n't necessarily need to drop your coverage because you ca n't afford the original rates . Why would you do this rather than just drop the policy altogether ? - your program 's existing risk class and your current medical insurability . You may also consider converting your term program to a permanent policy as well . I highly recommend consulting with your agent before dropping your coverage to make sure it 's the right move for you . There may be alternative courses of actions you have n't thought of that are available to you that may play out better for you in the long run . 