People get so caught up in making money that they forget about saving it. And no, we do not mean hoarding more money in your bank. What we mean is reducing expenses and avoiding losses. The goal of “making money” is to put more cash in your pocket – saving money will yield similar results.
If you are like most people, then you have an insurance policy. And depending on how well you did your research, you are either losing money or you will be making it.
Below you will receive 5 tips on how to avoid taking losses on your life insurance policy so that you can keep more money in your pocket.
THE IMPORTANCE OF A GOOD LIFE INSURANCE POLICY
Life insurance is very important for you and your family for a variety of reasons. The greatest benefit it provides, however, is the financial security it gives your family if you pass on. This doesn’t mean that it’s as simple as getting signed up for a policy, however. You’ll want to do your research and go for the best deal you can get.
That said, there are many secrets life insurance providers try to keep from the general public for their benefit. By knowing what they are and what to do, you can get the maximum benefit from your life insurance policy. The first thing they do not want you to know is that there is in-fact more information you need to know.
LIFE INSURANCE COMPANIES DON’T ALWAYS KNOW WHEN THE INSURED PASSES ON
When the insured passes on, the rule is that the beneficiary of the policy should inform the insurance company about the death. But sometimes beneficiaries are unaware of their role in the life insurance policy. The insurance company will, therefore, have no idea that the insured has passed on.
If premiums were still payable, some of the cash value of the policy might be used to cover the missed premiums to prevent a payment lapse. However, this also leads to a decrease in the value of the policy. On the other hand, the deceased may have made all of the required payments, meaning the insurance company would have no need to contact them. They would therefore never notice that they had died.
To avoid this, make sure you give your beneficiaries all the necessary information they will need in the event of your death so they can successfully file a claim.
IT’S THE BENEFICIARY THAT GOES TO THE LIFE INSURANCE COMPANY AND NOT THE OTHER WAY ROUND
The assumption that your life insurance policy provider will make an effort to track down all your beneficiaries in the event of your death is misguided. Insurance companies simply won’t go through the trouble.
More often than not, beneficiaries aren’t even aware that they are beneficiaries of a policy. They won’t know to go file a claim after your death, and so that money will remain with the insurance company, and they won’t even bother to inform them. Avoid this by giving your beneficiaries all the relevant information they’ll need to file a claim, including the value of the policy and its number, as well as contact details they can use to reach the insurance company.
Another step you can take to protect your beneficiaries fully is to have your life insurance pay for your mortgage. That way, even after you die, the mortgage payments will continue to come in, and your family will be guaranteed a roof over their heads. You can invest in Mortgage Protection Insurance, over and above your life insurance policy, to prevent any problems arising from the failure of the insurance company to locate your beneficiaries.
If you would like more information on mortgage protection insurance, you can read Fabric’s Ultimate Guide to Mortgage Protection Insurance.
4. ALWAYS PICK TERM LIFE INSURANCE OVER PERMANENT LIFE INSURANCE
Agents have every incentive to encourage you to pick permanent life insurance over term life insurance. The commissions are higher, so they earn more. But this means slower benefits for you as most of the money you pay in the first couple of years will either cover administrative costs or go straight into the agents’ pockets. As a result, the benefits will not accrue as quickly as they would have had you picked term life insurance instead.
The difference in price between the two can also be enormous. Sometimes, it can be more than $5000 annually! Not only does term life insurance bring you your benefits faster, it also saves you a pretty penny!
YOU WON’T FIND THE BEST DEALS ONLINE
Insurance companies are well aware of all the hype surrounding the internet and how readily people will buy just about anything, even an insurance policy, online. They, therefore, leverage this phenomenon by posting quote systems online that only show companies with the highest rates. These quote systems are also quite often misleading, showing costs that a very small fraction of the general population would actually qualify for in a bid to attract customers to what they think is a great deal.
To get the very best deals on your life insurance policy, or any other policy for that matter, shop around as much as you can and meet with actual agents face to face. You’re far more likely to strike a sweet deal that way.