types of insurance

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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