A FEW TIPS TO KEEP IN MIND WHEN PURCHASING A LIFE INSURANCE POLICY
Take your time. On the other hand, don’t put off an important decision that would protect your family. Make sure you fully understand any policy you are considering and that you are comfortable with the company and product.
After you have purchased an insurance policy, keep in mind that you may have a “free-look” period usually 10 days after you receive the policy during which you can change your mind. During that period, read your policy carefully. If you decide not to keep the policy, the company will cancel the policy and give you an appropriate refund. Review the copy of your application contained in your policy. Promptly notify the agent or the company of any errors or missing information.
Review your policy periodically or when your situation changes to be sure your coverage is adequate.
ADDITIONAL ITEMS TO CONSIDER WHEN YOU ARE SELECTING A TERM OR PERMANENT POLICY
What happens if I fail to make the required payments?
If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium with no interest charged. In a term policy at the end of the grace period if you do not make a payment the policy will lapse. In a permanent policy, the company can, with your authorization, draw from a permanent policy’s cash surrender value to keep that policy in force as long as there is sufficient cash surrender value. In some flexible premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values.
What if I become disabled?
Provisions or riders that provide additional benefits can be added to a policy. One such rider is a waiver of premium for disability. With this rider, if you become totally disabled for a specified period of time, you do not have to pay premiums for the duration of the disability.
Are other riders available?
Another rider, called an “accidental death benefit”, provides for an additional benefit in case of death by accidental means.
“Child Rider” This rider, if available, would require additional premium. Availability and specifics varies by carrier and state.
A relatively new rider offered by some companies provides “accelerated benefits,” also known as “living benefits.” This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home. This rider, if available, would require additional premium. Availability and specifics varies by carrier and state. This rider, if available, may require additional premium. Availability and specifics varies by carrier and state.
When will the policy be in effect?
If you decide to purchase the policy, find out when the insurance becomes effective. This could be different from the date the company issues the policy.