Insurance claims

When did you have life insurance and when did you just have premium receipts?

When did you have life insurance and when did you just have premium receipts?

People buy Life Insurance every day somewhere. They go online, they see life insurance agents, they respond to offers from banks and credit unions, and they buy it at their employer. All of these offer opportunities to think you had coverage you didn’t.

In the vast majority of cases applying, and then paying premium, results in real coverage that helps millions of people every year. However, there are some things you might miss that could result in your beneficiary being very disappointed. And you can’t just go back and fix it at that point.

Life insurance is a basically very simple, your beneficiary gets paid if you die. After that there are many ways to make the offer of coverage. Some of these “offers” are Term, Whole life, Variable life, Universal life, Accident only, credit life and more. Each of these provide several ways to pay for them.

So what are some of the unseen potholes you need to think about?

Verification of coverage – In all cases you need to make sure you received “verification of coverage.” This might be a “policy” or it might be a verification of coverage outline or certificate. No matter what the format was you need to read it and keep it where your beneficiary can find it. That document will tell you what coverage you actually have and how to keep it in effect. It will also tell your beneficiary how to file a claim.

Premium payment – Somebody must pay the premium to keep the insurance coverage. Every year we hear from somebody who had found an insurance policy in their parents papers but the parents had forgotten to pay the premium as they got older. After many years of payments the coverage is not there when it is needed the most. In some cases, with policies that included a “cash value”, the policy may have been being kept in force by using the accumulated cash. That means if you find an old policy do not throw it away until you call the insurance company and check on it.

Promotional or “Free” insurance – People frequently get offers for “Free” life insurance from banks, credit cards, car dealers, mortgage companies and credit unions. In most cases this is “AD&D” which is Accidental Death and Dismemberment. This means it only pays in the event of an accidental death or in some cases the loss of some combination of body parts. You have to be a “”member or have an account with whoever made the offer, so it is not enough to just return the offer and think you have coverage. If you are managing the affairs for somebody who dies be sure to contact every credit card company they used to see if it included a credit, or perhaps term, life policy.

Employer group term – Employer provided group term life insurance is one of the most common ways people are covered by life insurance. In most cases all eligible employees are given a basic amount of coverage and the employee may purchase more if they ask. “Eligible” is critical terminology here because if the employee is suddenly no longer eligible, they may not be covered by the insurance company even if they kept paying the premium. These policies typically include “Waiver of premium”, and “Conversion” rights. Waiver is a provision that “Waives premium payment” allowing the benefit to be kept if the insured becomes disabled and cannot pay the premium. Conversion allows the insured to change the coverage to a policy they own and would not lose based on employment eligibility.

This is a very brief look at the subject but it is so important that you should talk to your insurance agent about all the places you may have coverage and see if you really need coverage, and if you do – that it is really there. And by the way, get a real agent, one you can walk in and talk to, one who might really be there if your family needs the help.

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Do you really need to outrun the bear or just be self-insured?

Stop and take a breath because if the term “Self-Insurance” made you stop breathing, you need to relax and keep reading.

The purpose of this post is to introduce you to a concept, not to get real technical.  I will get technical in future messages.

There is an old joke that goes like this. Two guys are camping and one of them sees a bear coming into the camp. He begins to put on his running shoes. His buddy says “Why the shoes…you can’t outrun a bear?” The guy with the shoes says “I don’t need to outrun the bear I only need to outrun you!”

So, you might now be asking, how does that relate to being self-insured?

What if this year, your medical plan did not have a rate increase but all of your competitors saw 10% to 45%? That might be between $30 and $135 per month, per employee assuming an average cost of $300 per employee. Would that give you a competitive edge?

Read more…

For more information, contact Bill Weaver, Focus Benefits Group, 602-381-9900.

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Remember that Exotic dancer that received life insurance money because she was the legal beneficiary?

Hopefully, readers will remember the post I recently did about the importance of beneficiary statements?

 
An announcement at the Proskaur.com practice blog today tells the following story.

 
Eighth Circuit: ERISA Plan Beneficiary Designation Trumps Will.

 
In Hall vs. Metropolitan Life Hall had a group life policy making it an ERISA life plan. (This is where HR people need to remember this case.)

 
Hall remarried and completed a will, naming his spouse the beneficiary of his life insurance. However, he did not apparently contact the HR department and change the beneficiary statement. On his subsequent death, the new spouse attempted to collect the life insurance proceeds. She was denied!

 
There are other complications and questions, but from standpoint of the HR person it would be important to be able to document that you were never aware of Hall’s intentions to make changes to his estate.

 
In the majority of cases, HR will not be informed of changes like this because employees forget about the group life plans. But, if you are informed of a change of status on the Medical or Dental plans, you should make it policy to ask if changes need to be addressed in any other benefits that might be affected.

 

 

Read more

 

For more information, contact Bill Weaver, Focus Benefits Group, 602-381-9900.

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