Life Insurance Lawyer Explains Key Components
Life insurance policies are now more widely available than they ever have been. Many insurance providers have realized what a profitable business opportunity this can be, and have expanded their portfolios of offerings for individuals in various income brackets and lifestyles. That being said, it is important to understand that not all life insurance policies are created equal. It is not uncommon for consumers to receive advertisements in the mail that offer life insurance policies at lower rates and ‘instant approval’. For any of our readers looking to purchase a life insurance policy, it is important to understand some key components that make up these great offers before choosing to purchase. The three components of life insurance policies that we will be highlighting today are: 1) Living Benefits, 2) Lower Premiums, and 3) the ‘Instant Approval’. These components are often advertised as bargains to consumers and consumers will jump on board without truly knowing much about these areas. With that in mind, let’s break these matters down.
This additional offering on a life insurance policy allows policyholders to cash in on some of the policy value while still alive. While policyholders may not be able to realize the full value of the policy as their beneficiaries would upon their passing, it is still an option for those that may need the money during their lifetime. This additional offering on a policy will come at an additional cost to the policyholder, so be sure you understand the potential outcome by accepting such an add-on. The policy will generally pay out on this benefit if the policyholder experiences some sort of terminal illness that cuts life expectancy by a significant amount. This is just an example of one reason a living benefit add-on might pay out, but consumers will need to understand all of their options if they elect to purchase this additional rider to their policy. While you can rely on a verbal explanation from an insurance agent for the most part, it is best to really dig in to the policy documents to fully understand what you are buying.
As stated above, it is not uncommon to get a mail advertisement offering life insurance with lower premiums. This is partially true in that more insurance providers are now offering lower premiums than historically seen due to a larger competition pool. On the other hand, these advertisements are also basing claims of lower premiums on the assumption that the recipients are healthy and younger individuals. If an individual follows up with this advertisement with poor health or nearing retirement, they may be shocked to hear how much higher the premiums will actually be. It is important to realize how premiums and the total coverage you are receiving are correlated when comparing plans. Get a full understanding of what you are buying before signing on the dotted line.
The aforementioned advertisements listing lower premiums will frequently sell consumers on an instant approval for coverage without the need for a medical examination. While this may seem like a great opportunity to grab a better deal on coverage and premiums for those with medical conditions, be forewarned that the lack of a medical examination in receiving coverage may actually hurt you or your loved ones in the long run. While coverage and lower rates now may seem like a great deal, the reality is that the consumer may be relying on a false sense of security. The consumer may feel like they are covered by a policy for now, but once they have passed there is a good chance their beneficiary’s claims will be denied due to misrepresentation. The insurance provider will make a determination based on the claim that the insured party signed on for a policy while claiming good health. Once the facts related to the insured’s death and/or lifestyle come out, the insurance provider will surely fall back on this to get out of paying.
Overall, it is important for consumers to understand what they are buying regardless of the circumstances. That being said, these three components are big factors in modern day life insurance policy purchases. Without really understanding what you are purchasing, you can find yourself paying for a product that you will not truly benefit from. Be sure to educate yourself before making any big decisions on life insurance purchases.