Three Simple Ways to Ensure That Your Policy Stays in Force
1. MAKE SURE YOUR PREMIUMS ARE PAID
If you don’t pay your light bill, your lights will turn off. That’s a pretty obvious sign that your bill needs to be paid. Unfortunately, life insurance companies don’t always give you clear notice that your premiums need to be paid until the policy has already terminated. That is why your premiums must be paid on time. To do that, you will need to know how frequently you are required to pay the premiums and how they need to be paid. Many policies allow for premiums to be paid monthly, quarterly, or annually via check or automatic bank withdrawal. However, having an auto-draft set up for your monthly premiums does not get you off the hook for making sure your premiums are paid. If your bank puts a stop payment on the withdrawal for any reason, the insurance company may make one more attempt to withdraw the payment before giving up entirely. Occasionally, an insurance company will send notice of a missed premium or a “late payment offer,” allowing you to reinstate the policy for an additional premium. Therefore, to make sure you don’t lose your policy, always make sure you open (and read) your mail from the insurance company AND double-check that the premium payments are withdrawn per the agreed-upon frequency of payment.
2. IF YOU MOVE, YOU (MIGHT) LOSE
When you finally close on your dream house, or your application gets approved for that apartment you’ve had your eye on in the city, you pick up the phone and immediately dial your life insurance agent’s number to share the good news…..right? Kidding. In fact, I would imagine that the last person you would think to share your new address with is your insurance agent. However, think for a moment about a situation where your premium payment didn’t go through for some strange reason last month. The insurance company sends out a letter notifying you that your policy entered its grace period and is in danger of lapsing….to your old address. You never get the notice, your policy terminates for lack of payment, the insurance company keeps all of those premium payments you made previously. You and your beneficiary are out of luck. A simple way to avoid this disaster is just by notifying your life insurance agent or life insurance company directly that you have new contact information. If the insurance company’s notices don’t reach you after that, you have a much better chance of fighting the termination of your policy.
3. APPOINT SOMEONE TO TAKE CARE OF YOUR FINANCES IF YOU GET SICK
This one goes back to paying your premiums on time. Life happens…an insured person gets sick and is unable to take care of their own affairs. As a result, their bills go unpaid, services are terminated, and chaos ensues. The same applies to life insurance premiums. As you may already know, insurance companies generally don’t care if you are too sick to pay your premiums. They really only care if they have received their money for the month. If they haven’t, they are more than happy to keep the premiums you already paid and terminate your policy, leaving you up the creek without a paddle. Appointing someone you trust to leap into action if you’re too ill to take care of your financial obligations will ensure that your premiums continue to be paid, and your policy remains in full force and effect. A durable Power of Attorney should do the trick!
