“When you think about insurance, see us!”

What type of coverage do you need?

You've got the best of intentions in providing for your loved ones after you're gone, but your actions could come back to haunt them in the form of a bumbled life insurance payout if you're not careful. Here we explain five mistakes to avoid so that your beneficiaries get what they're owed - no matter what type of life insurance policy you have.

1. Lying on your life insurance application

They say the truth hurts, but it can hurt even more if you lie when you fill in a life insurance application. While it may be tempting to deny that you're a smoker, or that you've been treated for a particular disease or medical condition, you could find your policy null and void.

Life insurance companies consider these factors when setting rates -- or determining whether to insure you at all.

If your life insurer finds out you lied, it's considered "material misrepresentation," and your application for life insurance will probably be denied, says Whit Cornman, spokesman for the American Council of Life Insurers (ACLI).

If the policy has already been issued, there's typically a two-year contestability period. If your insurer finds out during that time that you've lied, the policy may be canceled or you might face higher premiums, he says.

If the lie is particularly egregious, the insurer could deem it fraud, even after the two-year contestability period is up, and the policy could be rescinded, says Stephen Rothschild, chairman of the nonprofit LIFE Foundation.

2. Failing to make premium payments and letting your policy lapse

Just because you miss a payment doesn't mean your policy is dead in the water. Life insurance companies typically offer policyholders a 30-day grace period for payment, and some companies extend that to 60 days, Rothschild says. During that time your policy will still be in effect, Rothschild says.

Even after the grace period is up, you usually can get your term policy reinstated, but if the lapse has been lengthy you may need to undergo another medical examination, he says.

If you have a permanent life insurance policy, the insurer might use the cash value in the policy to cover the premiums and prevent a lapse in coverage, says Beth O'Brien, vice president of life product development at Genworth.

However, if your policy lapses and is not in force when you die, your beneficiaries are out of luck.

Read More: Source

Posted 12:09 PM

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
Change the CAPTCHA codeSpeak the CAPTCHA code
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2019
  • 2018
  • 2016
  • 2015
  • 2013

View Mobile Version

Our Customer Feedback

Our latest blogs

  • State Auto
  • Grange
  • Southern Mutual
  • The Hartford
  • Utica National
  • Southern Trust
  • GBE
© Copyright 2019. All rights reserved. Powered by Insurance Website Builder