« The Benefits Of Workers Compensation Insurance | Main | Short Term Health Insurance - What You Need To Know »
Annual Life Insurance Annual Review? Yes, And Avoid Potential Disaster
By admin | December 13, 2007
On Halloween, my little girl once threatened to go trick or treating dressed as an insurance agent just like Dad. It probably would have scared the neighbors more than Freddie Krueger from “Nightmare on Elm Street”.
But if you haven’t had your life insurance policy reviewed by an experienced and independent life insurance broker you may be in for a few unpleasant surprises!!
As an example, let’s take “Bill”. Bill named his wife as a primary beneficiary and his children as secondary beneficiaries on his life insurance policy. Years later, Bill became divorced, remarried and later Bill died. His beneficiaries submitted the claim.
His policy indicated as his primary beneficiary……, “my wife”. The question naturally arose, “Which wife? Wife#1 or wife # 2? ” The confusion had to be settled in court because the beneficiaries were not named. An experienced professional would have saved Bill’s beneficiaries a lot of grief.
His secondary beneficiaries, his children, were only 2 and 3 years old respectively. If he and his “wife” had died together, his kids would not have received any benefit, nothing, until they reached 18 years of age. An insurance company would have had to put the money in trust at interest until age 18. Of course, the kids would have needed the money at the time of Bill’s death; not 15 years later. Proper naming of a beneficiary would have solved the problem beforehand.
Besides beneficiaries a professional agent would look at expiring benefits such as the policie’s riders. Riders the insured paid for but never used because no insurance agent reviewed it with him. Money thrown away!
Suppose, let’s name her Barbara, had a term policy. She could have exercised the conversion option and changed to a permanent plan with no medical underwriting. What’s the benefit of a term conversion? Barbara had decided she wanted to pick up a permanent policy since term in New York runs out at age 80. After she originally took out the term policy Barbara developed a heart condition, a drinking problem and started smoking cigarettes. She applied for a permanent plan with another company that would have protected her for life but she was turned down as uninsurable. Luckily she still had the original term plan.
A conversion on a term policy means that the insured can change the coverage from term to permanent without proof of insurability, regardless of her health condition therefore guaranteeing permanent insurance coverage even if she was dying at the time of application.
These are only a few of the potential hobgoblins that could be a lot worse than Freddie Krueger. Check with an independent life insurance broker and ask him or her for a review of your policies.
Alan S. Fernandez is president of Foundation Financial Services with a BBA in Finance and Economics from Iona College, studied under the Life Underwriters Training Council and Certified Financial Planner programs and with 15 years in the insurance industry is a well known problem solver among businesses and individuals alike. He is also an insurance instructor with Citicorp. He can be contacted at afern109@optonline.net or visit the FFS website at http://www.foundationfinancialservicesny.com
Tags: Broker, life insurance, Professional, review
Related Posts
- Personal Insurance Reviews Benefit The Customer And Agent
- Selecting The Best Car Insurance
- Term Life Insurance News Guide 101
- How To Determine Whether A Single Trip Or An Annual Travel Insurance Policy Is Right For You?
- Annual Travel Insurance – Could You Save Money?
Topics: Insurance |