Q: My life insurance policy was canceled because I missed a premium. What do I do?
A: How long has it been since your premium was missed? If it was less than 30 days, all life insurance policies should have a clause that says that you can make that payment during a grace period of no less than 30 days. If it has been more than 30 days, then you can apply for reinstatement of the life insurance policy. The policy can normally be reinstated up to three years after you miss your payment. You have to file an application, produce evidence of “insured ability satisfactory to the insurer” and pay all of the back due premiums along with interest.
It is important that you act quickly if you discover your policy has lapsed and that you find out from the insurance company what your options are. You may need counsel to assist you and there may be other grounds for reinstating the policy or forcing them to reinstate it without filing the reinstatement application. Sometimes insurance companies will do new underwriting on a person and find that they are not satisfactory because their health has declined. In that instance, it might be worth speaking to a life insurance lawyer.
Q: What is whole life insurance?
A: Whole life insurance is a type of life insurance product that, as its name suggests, covers you for your whole life. This type of policy is different from term life insurance, which covers you for a set period of time – the term. Whole life is usually more expensive than term. While it is more expensive because it can provide coverage beyond a set term, it also can provide additional benefits. Certain whole life policies contain a savings feature, whereby a part of your premium payment is saved and used to generate interest. This creates a “cash value” also known as an “account value.” This account value can be used by the owner of the policy to earn interest, pay additional premiums, take out a loan, or be withdrawn as cash.
Whole life policies with these features sometimes allow insurance companies to charge monthly premium expenses and cost of insurance charges. The monthly charges can reduce the amount of the cash value. Usually, cost of insurance charges are based on your age, gender, and projected mortality rate. But some insurers may attempt to include other factors, not contemplated by the terms of your policy, to charge rates higher than the policy actually allows. By classifying these additional factors as “cost of insurance,” the insurer may charge you rates that are higher than allowed, and thus may attempt to reduce your account value.
The top ten life insurance companies, by market share, are Northwestern Mutual, New York Life, MetLife, Lincoln National, Prudential, Mass Mutual, Aegon, John Hancock, State Farm, and Minnesota Mutual. If you have questions about your coverage with your insurer, click below.
If you believe you may have a case related to the cancellation of your life insurance policy, the denial of a life insurance claim, or if you have had a surprising increase in premiums on your whole life policy, a larger than expected deduction of your account or cash value, or have general questions about the rates your insurer is charging, we are here to help. Contact our office today to see what your options are. We have the experience to help you throughout the process and can help you take the next steps needed to resolve the issues you are facing with the insurance company.