Making Good on a Defaulted
Policy: Life after Lapse
The whole concept of buying insurance
policies to protect our lives, homes, health and cars is an
acknowledgment that unexpected things happen in life. Sometimes an
unexpected event may derail your ability to pay your bills in a timely
fashion, and among those neglected bills may be your life insurance
premium. Depending on how your policy is set up, a lapse in your life
insurance will be handled differently. You’ll want to check your policy
or speak with your InsureMeOnline.com dedicated agent for details
specific to your case. That said, there are some basic principals that
apply to every situation.
In general, insurance of any kind needs to be paid up in
order to be active. If your car insurance lapses and you have an
accident, for example, that accident may not be covered, even if you
immediately make good on all overdue premiums. But while we are all
likely to have a number of traffic mishaps over the course of our lives,
we are each of us only going to die once. For that reason, there is
greater accommodation afforded to life insurance policies that lapse for
short periods of time. There are certain clauses built into most life
insurance policies specifically intended to help policyholders get out
of the lapsed-for-non-payment bind.
The best first step is always to call your life insurance
company. They will do everything they can help to you, and since they
have copies of your policy in hand, they can make sure every “i” is
dotted and every “t” is crossed. Most life insurance policies have a
grace period of 15 to 30 days for making late payments without any
penalty or adverse affect on your policy.
If non-payment stretches beyond the grace period, your life
insurance policy will go into default, but that’s still not the end of
it. The policy will first enter a period of dormancy where it is no
longer active but still available to the policyholder should
reactivation be desired. The length of the dormant period varies from
policy to policy, so be sure to ask if reactivation or reinstatement is
still possible, even if you’ve given up hope. Most life insurance
companies place tremendous value on their policyholders and will do
everything.
What’s Better for Couples?
Two Single Life Insurance Policies or One Joint Policy?
It happens time and again. Couples
finally get around to buying life insurance and, after a quick glance
through the options, they choose a policy they think will have them
covered should the worst occur. But when the worst then occurs, the
surviving spouse discovers that the life insurance policy the couple
intended to buy is not what the couple bought. Yes, they bought a
perfectly good life insurance policy, but it was not designed to provide
for a surviving spouse.
Rule number one: Never purchase life insurance in haste.
Rule number two: Married couples should seriously consider
two single life insurance policies instead of one joint policy. While
this is not the optimal choice for everyone, two life insurance policies
certainly serve a married couple very well, and this can help them
avoid some of the common mistakes made while purchasing joint life
insurance.
For example, the reason so many couples end up in financial
hardship is because they purchase the wrong kind of joint life insurance
policy. There’s one type of joint life insurance that pays out when one
or the other spouse dies, thereby caring for the financial needs of the
surviving spouse. However, there is another joint life insurance policy
that does not pay out until both parties are deceased. This is how so
many married couples get into trouble.
Two single life insurance policies have other advantages
over the single joint life insurance policy. There is a lot more
flexibility when it comes to the pay-outs. The situation is likely to
vary considerably in the case of one spouse’s death vs. the other’s.
Having two individual life insurance policies allows the policyholders
to truly tailor the pay-outs. according to the anticipated situation in
the event of either spouse’s death. Then there is the issue of divorce.
People thinking about life insurance are rarely thinking about divorce
simultaneously, but it’s always something to consider. Joint life
insurance policies can be a big problem in the event of a divorce. With
two single life insurance policies, it’s much easier. Each policyholder
amends his or her policy as desired and they’re done.