#thisis4u

Keep in mind these common mistakes before, during, and even after making your purchase. Read on to make sure you do not put your family's finances in jeopardy by making these mistakes.

Life insurance is a complicated but important kind of insurance coverage. It mainly consists of two types – Whole Life and Term Life. Unlike other insurance plans, life insurance pays out only after the covered policyholder passes away. Hence, it is vital to get the right life insurance coverage and avoid costly errors since rectifying them could prove to be near impossible by the time a problem is discovered after death.

With the Singapore life insurance industry seeing booming sales for 2021, Singaporeans are placing more emphasis and attention on the purchase of life insurance. Are they guilty of making these common life insurance mistakes? And are you one of them?

If you are currently in the market for life insurance or have recently bought a policy, read on to make sure you do not put your family’s finances in jeopardy by making these mistakes.

MISTAKE #1: WAITING TO BUY INSURANCE

It is not uncommon for people to delay their purchases of insurance policies. After all, the purchase of life insurance is a complicated matter. It is important to consider the amount of coverage you need as well as the cost. It is certainly not easy to make a decision with the plethora of life insurance options out there in the market.

However, buying a life insurance policy sooner, rather than later, can work in your favour if you are seeking to secure a policy at the lowest possible cost.

Life insurance rates generally increase as people age or as their health deteriorates. In some cases, illnesses or health problems may make you ineligible for coverage. The longer you put off the buying decision, the more the insurance will likely cost. Postponing the purchase of a life insurance policy could cost thousands of dollars over a lifetime.

MISTAKE #2: BUYING THE CHEAPEST POLICY

While it is important to shop for a life insurance policy that is affordably priced, the coverage that you are getting in return is also crucial. Life insurance policies can be a tad complicated, and it is a good idea to learn about their features and benefits.

Premiums of term life insurance are way less than whole life insurance and for a good reason. Term life insurance only covers you for a set period of time, while whole life insurance covers you until death.

If you believe that you would need life insurance for a set period of time, purchasing a term life policy would be best. On the contrary, if you are seeking lifetime coverage, or you want to own a life insurance policy that builds cash value similar to investments, whole life insurance would be a better choice.

The cheapest policy may not represent the best value. There could be other insurers in the market offering much better coverage at a slightly higher price. Hence, it is essential to evaluate the value of the life insurance plan that you are considering or currently hold.

MISTAKE #3: NOT PAYING PREMIUM ON TIME

You are expected to pay a premium in return for coverage from your life insurance plans. These premiums are based on your insurance risk class, which takes into factor your age, health, and many others.

Missing a premium payment may have serious consequences. Rather than a late fee penalty, a missed premium payment could cause your life insurance policy to lapse, and you will no longer have life insurance coverage. Depending on your insurer, you could get the policy reinstated by paying an additional sum of money.

However, in the event that you are unable to do so, you will have to seek a new life insurance policy. This could come with its own set of problems. Life insurance gets more expensive as you age, and even the difference of several years could lead to a substantial increase in cost. Any changes in health could lead to higher premiums or even ineligibility for life insurance altogether. The search for a new life insurance policy would also cause a coverage gap, and your dependents would not be insured if misfortune strikes during this period.

Life can also throw some unexpected curveballs at you; just as the recent Covid-19 events. Job loss, business failures, or even serious illnesses could impede your ability to pay for your insurance premiums. Hence, it is advisable to balance the coverage you need with a premium you can reasonably afford, even when all things have gone south.

How to avoid it? Pay your premiums on time! Ensure that you have sufficient funds in your bank account should you pay by GIRO, or set a monthly/yearly reminder for you to make payment. You should also consider using various platforms such as PolicyPal to track your various insurances.

MISTAKE #4: TOO LITTLE OR TOO MUCH COVERAGE

It is easy to under/overestimate how much your beneficiaries will need to maintain their current standard of living should anything unfortunate happen to you. Having too little coverage can have serious consequences for the people you leave behind, and they could face financial hardship as a result. Having too much coverage is also a problem due to the higher premiums charged to your card.

To calculate how much life insurance you need, consider what financial obligations need to be covered: replacing your income, paying off a mortgage or other large debts, and paying for your children’s education. Thereafter, consider what assets you have, such as savings, and if they are able to cover these costs. The difference between your assets and obligations is the gap that life insurance needs to fill.

As a rule of thumb, it is advisable for your life insurance coverage to be at least 10 to 15 times your current income. Nonetheless, this is just a rough estimate. Depending on your financial status, this number could be higher or lower.

MISTAKE #5: FAILURE TO REASSESS YOUR NEEDS

Most people would have their life insurance policy for quite some time, and there would be a lot of changes during that time. Your life insurance needs will differ greatly when you’re aged 20, 40 and even 60. These shifts in circumstances would signify a need to change your life insurance policies or life insurance beneficiaries.

Determine whether you need more to meet the growing needs of your beneficiaries or less coverage due to the amount of money you have amassed through the years. Carefully consider your budget and needs before purchasing another policy of any kind, to make sure you have the insurance you need at the right price.

If there are any changes to your dependents, do update your life insurance policy accordingly when these changes occur. This ensures those relying on you do not miss out on vital protection, should anything happen to you.

MISTAKE #6: BORROWING FROM YOUR POLICY

Life insurance policies that accumulate cash value could be a source of funds when you are in need of money. The cash value of a permanent or whole life insurance policy can generally be used for any reason you see fit, including tax-free withdrawals and loans, if done properly. Policy loans are borrowed against the death benefit, and the insurer uses the policy as collateral for the loan.

This is a great benefit, but it must be carefully managed. If you take too much money out of your policy and your policy lapses or runs out of money, all the gains you have taken out will become taxable. Not to mention, you would significantly reduce the death benefit available to your beneficiaries.

If you have taken too much money out and your policy is about to lapse, you may be able to maintain the policy by making additional premium payments, assuming you can afford them. When accessing your life insurance policy’s cash value, be sure to monitor it closely and consult your financial advisor to avoid any unwanted tax liability.

CONCLUSION

The purchase of life insurance policies is a complicated affair, but we are here to make it simple for you. Keep in mind these 6 common mistakes before, during, and even after making your purchase.

Consider making your insurance purchase at an earlier age when it is more affordable. Select sufficient coverage at the right price and pay your premiums on time. Reassess your needs every now and then to ensure you have enough coverage. There are no rules that disallow you from having multiple life insurance coverages, so go for it if the need arises. Avoid borrowing from your life insurance policies, and ensure you are able to manage them wisely when you do.

6 Fatal Life Insurance Mistakes That You Could Already Be Making

MARIA LUISA DE LUMEN

2 min ago

Keep in mind these common mistakes before, during, and even after making your purchase. Read on to make sure you do not put your family's finances in jeopardy by making these mistakes.

Life insurance is a complicated but important kind of insurance coverage. It mainly consists of two types – Whole Life and Term Life. Unlike other insurance plans, life insurance pays out only after the covered policyholder passes away. Hence, it is vital to get the right life insurance coverage and avoid costly errors since rectifying them could prove to be near impossible by the time a problem is discovered after death.

With the Singapore life insurance industry seeing booming sales for 2021, Singaporeans are placing more emphasis and attention on the purchase of life insurance. Are they guilty of making these common life insurance mistakes? And are you one of them?

If you are currently in the market for life insurance or have recently bought a policy, read on to make sure you do not put your family’s finances in jeopardy by making these mistakes.

MISTAKE #1: WAITING TO BUY INSURANCE

It is not uncommon for people to delay their purchases of insurance policies. After all, the purchase of life insurance is a complicated matter. It is important to consider the amount of coverage you need as well as the cost. It is certainly not easy to make a decision with the plethora of life insurance options out there in the market.

However, buying a life insurance policy sooner, rather than later, can work in your favour if you are seeking to secure a policy at the lowest possible cost.

Life insurance rates generally increase as people age or as their health deteriorates. In some cases, illnesses or health problems may make you ineligible for coverage. The longer you put off the buying decision, the more the insurance will likely cost. Postponing the purchase of a life insurance policy could cost thousands of dollars over a lifetime.

MISTAKE #2: BUYING THE CHEAPEST POLICY

While it is important to shop for a life insurance policy that is affordably priced, the coverage that you are getting in return is also crucial. Life insurance policies can be a tad complicated, and it is a good idea to learn about their features and benefits.

Premiums of term life insurance are way less than whole life insurance and for a good reason. Term life insurance only covers you for a set period of time, while whole life insurance covers you until death.

If you believe that you would need life insurance for a set period of time, purchasing a term life policy would be best. On the contrary, if you are seeking lifetime coverage, or you want to own a life insurance policy that builds cash value similar to investments, whole life insurance would be a better choice.

The cheapest policy may not represent the best value. There could be other insurers in the market offering much better coverage at a slightly higher price. Hence, it is essential to evaluate the value of the life insurance plan that you are considering or currently hold.

MISTAKE #3: NOT PAYING PREMIUM ON TIME

You are expected to pay a premium in return for coverage from your life insurance plans. These premiums are based on your insurance risk class, which takes into factor your age, health, and many others.

Missing a premium payment may have serious consequences. Rather than a late fee penalty, a missed premium payment could cause your life insurance policy to lapse, and you will no longer have life insurance coverage. Depending on your insurer, you could get the policy reinstated by paying an additional sum of money.

However, in the event that you are unable to do so, you will have to seek a new life insurance policy. This could come with its own set of problems. Life insurance gets more expensive as you age, and even the difference of several years could lead to a substantial increase in cost. Any changes in health could lead to higher premiums or even ineligibility for life insurance altogether. The search for a new life insurance policy would also cause a coverage gap, and your dependents would not be insured if misfortune strikes during this period.

Life can also throw some unexpected curveballs at you; just as the recent Covid-19 events. Job loss, business failures, or even serious illnesses could impede your ability to pay for your insurance premiums. Hence, it is advisable to balance the coverage you need with a premium you can reasonably afford, even when all things have gone south.

How to avoid it? Pay your premiums on time! Ensure that you have sufficient funds in your bank account should you pay by GIRO, or set a monthly/yearly reminder for you to make payment. You should also consider using various platforms such as PolicyPal to track your various insurances.

MISTAKE #4: TOO LITTLE OR TOO MUCH COVERAGE

It is easy to under/overestimate how much your beneficiaries will need to maintain their current standard of living should anything unfortunate happen to you. Having too little coverage can have serious consequences for the people you leave behind, and they could face financial hardship as a result. Having too much coverage is also a problem due to the higher premiums charged to your card.

To calculate how much life insurance you need, consider what financial obligations need to be covered: replacing your income, paying off a mortgage or other large debts, and paying for your children’s education. Thereafter, consider what assets you have, such as savings, and if they are able to cover these costs. The difference between your assets and obligations is the gap that life insurance needs to fill.

As a rule of thumb, it is advisable for your life insurance coverage to be at least 10 to 15 times your current income. Nonetheless, this is just a rough estimate. Depending on your financial status, this number could be higher or lower.

MISTAKE #5: FAILURE TO REASSESS YOUR NEEDS

Most people would have their life insurance policy for quite some time, and there would be a lot of changes during that time. Your life insurance needs will differ greatly when you’re aged 20, 40 and even 60. These shifts in circumstances would signify a need to change your life insurance policies or life insurance beneficiaries.

Determine whether you need more to meet the growing needs of your beneficiaries or less coverage due to the amount of money you have amassed through the years. Carefully consider your budget and needs before purchasing another policy of any kind, to make sure you have the insurance you need at the right price.

If there are any changes to your dependents, do update your life insurance policy accordingly when these changes occur. This ensures those relying on you do not miss out on vital protection, should anything happen to you.

MISTAKE #6: BORROWING FROM YOUR POLICY

Life insurance policies that accumulate cash value could be a source of funds when you are in need of money. The cash value of a permanent or whole life insurance policy can generally be used for any reason you see fit, including tax-free withdrawals and loans, if done properly. Policy loans are borrowed against the death benefit, and the insurer uses the policy as collateral for the loan.

This is a great benefit, but it must be carefully managed. If you take too much money out of your policy and your policy lapses or runs out of money, all the gains you have taken out will become taxable. Not to mention, you would significantly reduce the death benefit available to your beneficiaries.

If you have taken too much money out and your policy is about to lapse, you may be able to maintain the policy by making additional premium payments, assuming you can afford them. When accessing your life insurance policy’s cash value, be sure to monitor it closely and consult your financial advisor to avoid any unwanted tax liability.

CONCLUSION

The purchase of life insurance policies is a complicated affair, but we are here to make it simple for you. Keep in mind these 6 common mistakes before, during, and even after making your purchase.

Consider making your insurance purchase at an earlier age when it is more affordable. Select sufficient coverage at the right price and pay your premiums on time. Reassess your needs every now and then to ensure you have enough coverage. There are no rules that disallow you from having multiple life insurance coverages, so go for it if the need arises. Avoid borrowing from your life insurance policies, and ensure you are able to manage them wisely when you do.

#areteautomation #lifehealthadvisors#thisis4u#happy#fun

Credits: valuechampion

Date: July 4, 2022

Short Answer

A life insurance policy is a unilateral contract. As long as you make your payments on time, the insurance company is obligated to hold up its end of the contract. If you miss a payment or your cash value is exhausted, however, you could lose your coverage. The good news is that insurance companies offer a grace period for missed payments. And even if you don’t pay up before the grace period expires, you may still be able to reinstate the policy.

Keep reading to learn more about what could happen if your life insurance lapses and what you can do to avoid it.

If you need life insurance, the last thing you want is for your policy to lapse. Not only do your loved ones lose the protection the policy affords, but you may have to pay more to reinstate your policy or get a new policy.

If you forget or can’t make your payment on time for another reason, understanding your options is critical to making sure you remain covered.

About Your Grace Period

If you miss your payment due date, all is not lost. If you have a permanent life insurance policy with cash value, the insurance company may use it to pay your premium. But even if you have a term policy, you still have time.

Life insurance companies give you a grace period — typically about 30 days, depending on your state’s insurance laws — to catch back up with your premiums. Just remember that you’ll also need to make the next month’s payment.

If you die during the grace period, the insurance company will even pay out the death benefit, even if you haven’t yet made up your payment. But if you go past the grace period without making the payment, the policy will lapse.

Reinstating Your Life Insurance Policy

If your policy lapses, you can apply to have it reinstated. You may need to meet certain requirements, however, depending on when you initiate the reinstatement process.

For example, if it’s within 30 days of the policy lapsing, you may be able to reinstate it by just catching up on your premiums. But if it goes longer than that, the insurance company may require you to provide proof of insurability.

This means that if your health has changed since you originally bought the policy, you may be required to get a new policy with a higher premium. Depending on the health issue, the insurance company could even decline your request altogether.

Keep in mind that different insurance companies have different rules when it comes to reinstatement. So, find out what your requirements for reinstating a lapsed policy are before it’s too late.

Should You Replace Your Policy Instead?

If you’re in good health, you may think that replacing your life insurance policy is better than reinstating. After all, you don’t have to follow the insurance company’s rules to get the policy reinstated.

But even if your health hasn’t changed, your premium may still go up simply because you’re older than when you first bought the policy.

That said, if your life insurance policy lapses, do a little comparison shopping to see if there are any life insurance companies that can offer you a lower premium than what you were paying on your lapsed policy. This process could be especially helpful if you didn’t shop around when you first bought the policy.

How To Avoid A Policy Lapse

While you have options if your life insurance policy lapses, the best plan is to avoid a lapse altogether.

With lapses due to non-payment, preventing one can be easy. Start by setting up automatic payments so that you don’t have to remember to pay every month. Also, make sure that you have overdraft protection on your checking account so that a payment doesn’t get returned due to insufficient funds.

If you change your bank account, give the life insurance company the information from your new account so it can update your payment information. You can usually do this by yourself in your online account.

If you have a permanent life insurance policy, also keep an eye on your cash value balance, especially if it’s a universal life policy that doesn’t offer guaranteed growth. If it gets low, you can increase your premium payment to replenish your cash-value account.

The Bottom Line

If you have a term life insurance policy, make sure to keep up with your payments to avoid a policy lapse. And if you have a whole life or universal life policy, keep an eye on your cash value.

If your life insurance policy does lapse, contact the insurance company to learn about its reinstatement policy. Because reinstatement can include extra requirements, however, also consider replacing the policy with a new one.

The important thing is to ensure that you and your loved ones remain protected in case something bad happens to you.

Life insurers have been latecomers to the digital era. That will have to change.

In the mid-1970s, 38-year old entrepreneur Charles Schwab started a revolution. He built a new kind of brokerage firm that offered discounted commissions and telephone self-service that gave customers the ability to buy their own stocks and bonds. He computerized the entire operation years before the big Wall Street firms, changing how the brokerage industry operates and how customers manage their investments.

A similar upheaval is on the way in life insurance, which so far has been slow to embrace digital change. Life-insurance companies are still selling the old-fashioned way, broker to customer, instead of empowering people to make their own decisions and participate in the process. Moreover, insurance-policy sales are still laden with excessive face-to-face interaction and mountains of paper.

But consumers in every sector now demand speed, relevance, and convenience, no matter what channel they use or what product they’re shopping for — and insurance is no exception. Every month there are more than a million Google searches for terms related to life insurance and seven million total visits to the websites of the top ten carriers — a sign of considerable online interest in life insurance. But consumers can’t search, evaluate, and purchase policies online as easily as they’d like to. While more than 70 percent start the life-insurance information-gathering process online, fewer than a third complete their purchase there.

To stay ahead of the digital revolution, carriers must take an omnichannel approach, providing compelling and relevant customer experiences no matter where their customers choose to interact. That takes a lot more than simply creating a mobile app. It requires a fundamental change in an organization’s operations and mind-set, affecting everything from the role of the agent to new, advanced, data-analytic capabilities.

We see three distinct horizons along which carriers will have to execute: (1) modernization of all channels of customer interaction; (2) interconnection of channels to deliver an unbroken customer experience; and (3) creation of personalized products via analysis of the vast and ever-expanding body of digital customer data.

Horizon 1. Digitization — modernize existing channels

We see several broad opportunities to modernize existing channels. First, the ability to insert life insurance into people’s daily lives and to use life events as triggers for purchase should be one of every carrier’s top priorities. Fortunately, opportunities already exist. People post about life events on social media and search for information about life insurance. Carriers simply need to utilize tools such as social-media listening platforms to identify touchpoints and launch initiatives to reach out proactively to potential customers.

The second opportunity is in redesigning and automating interactions so that customers don’t wait 30 days for responses or abandon carrier websites because they are outdated or difficult to navigate.

Carriers should apply technologies such as click-to-call, cobrowsing, and live video chats that allow customers to interact on their own terms. E-signature can remove some of the hassle of paperwork. Such innovations will not only improve the customer experience but create opportunities to achieve greater operational efficiencies. QNB Finansbank redesigned its loan-application process to service existing customers through the company’s mobile application. This overhaul of what had been a paper-based process allowed customers to go from “discovery to approved loan” in less than a minute, a benefit for both the company and the customer.

Finally, carriers can use existing technology to digitize agents’ daily lives. Customer information and interactions can be managed digitally through CRM tools, and advanced analytics can translate the resulting data into insights into how agents can improve their sales techniques.

Horizon 2: Differentiation — deliver a great customer experience

Exceptional customer experience can create a powerful competitive advantage. To deliver it, carriers need to develop a deeper understanding of their customers beyond just basic demographic information and web habits. They need to make use of quantitative and qualitative insights into customer behaviors, pain points, motivations, and aspirations, based on individual customers or through the development of “target personas,” i.e., a hypothetical amalgam of qualities and behaviors that represents a given customer segment.

Digital customer acquisition

Such customer intelligence should be brought together in an “insights repository” that links, for example, activity on social media, purchase transactions, online behavior, household financial details, and demographics. Technologies to do this already exist. Companies such as Pega Systems and ClickFox1 offer applications that track customers across many online and offline channels, blending data from multiple sources to create a unified view of varied customer segments.

Once a unified view of customer segments is in place, carriers can more accurately assess customer needs and appropriately personalize interactions in a way that will delight. Certain customers, for instance, will appreciate being able to use remote and/or robo-advisory models (e.g., online chat features). Leading financial-services institutions are embracing chat-bots such as Facebook Messenger or scheduling solutions such as appointy.com, which allow customers to schedule meetings with advisors.

But while some customers can be served with bots and online self-services, many will prefer to rely on advisors to help them with complicated financial planning and to sort through their best individual options. Here, digital tools can work on the back end to help the advisors, allowing them to sift through policy options easily, combine various offerings, and quickly match them to customer profiles. Ideally, an insights-based profile will include a given consumer’s prior relationship with the company — whether they have had other kinds of policies, have registered for information, or made initial inquiries, etc.

Horizon 3: Disruption — use data to create personalized products and services

In the next five to seven years, the most disruptive and successful life insurers will be those that excel in developing products, services, and consumer-facing digital experiences that are driven by customer needs and preferences. There are four ways that such products and services can be personalized.

The first is risk coverage. The choices will no longer be between term life, universal life, or whole life but a selection of the products that best reflect a customer’s current life stage and risk appetite.

Secondly, offerings can be personalized through the touchpoints that can best reach a customer at a specific moment. For instance, new parents who are searching online for nursery furniture could be offered a dynamic policy that enables short-term for specific goals, such as health emergencies or college savings, and then converts to a retirement-savings vehicle. The banking and retail industries have already started down this more personalized opportunity path.

Thirdly, the messages themselves can be customized based on a customer’s needs and aspirations. Life insurance is fundamentally about the trust customers have in a carrier. Marketing messages should build upon this emotional connection and enhance the sense of the carrier’s empathy with its customers.

Finally, personalized pricing can be tailored to a customer’s behavior, usage patterns, and loss-mitigation needs. This is already happening in the pricing of personal auto policies in the US.

To enable such a sophisticated tailoring of offerings, carriers will need to invest in several new capabilities: first, the ability to use data capture and analytical tools to flag customer life-stage changes and events; then, a customer-interaction engine capable of pinpointing touchpoints and responding in real time to what companies learn about prospective customers as they go through their buying journey; and finally, a product factory that creates custom offerings and bundles based on customer behaviors, usage patterns, and pricing preferences.

Overcoming three main challenges

Any company in any industry that wants to succeed at digital innovation and omnichannel mastery must have a laserlike focus on the customer rather than the channel, the organizational agility that arises from smaller teams, and a test-and-learn approach with real customers. They must also commit to dropping ideas that aren’t working, investing in those that do, and creating key performance indicators that will drive value.

Insurers, however, confront three additional challenges. The first is a lack of conviction that change is imminent and they must get ready to respond to it. It’s understandable, given the slow pace of innovation within the industry, that even executives who acknowledge change is coming feel they will have ample time to react once it starts. But the reality is that development of the capabilities for a successful digital transformation can take significant time, and savvy leaders will start building them in advance. For instance, there is already a war for talent. Insurers should be investing substantial resources in developing an organizational culture with digital knowhow and a mind-set that will attract people who are able to execute a transformation when the time is right. Allianz, for example, is investing — €650 million — in developing next-generation digital capabilities to support more than 85 million customers.2 Carriers need to ask themselves: If we’re not investing like Allianz, will we be competitive in the future?

The second organizational challenge is advisors’ resistance to company efforts at customer-relationship management (CRM). Customers are advisors’ lifeblood, and reluctance to share them with the company is understandable For this reason, leadership needs to continually and clearly articulate the reasons for — and the benefits that accrue from — any change or new technology, particularly its time-saving value and its potential for adding customers and increasing income. Even more important, every company initiative should take into consideration the behavior and motivations of advisors in the field. Indeed, the advisors should be thought of as “internal consumers.” It is crucial to involve them, for instance, in the development of digital tools. They are the ones who will be using them or interacting with the customers using them, and they can provide valuable feedback on whether they are useful or how they might be improved.

The third and final challenge for insurers is the existence of legacy IT systems that don’t translate particularly well to an omnichannel and digital world. We recommend a staged approach to accelerate IT integration and foster the development of omnichannel solutions. It starts with a pilot program whose goal is testing and learning. It may require manual input of data by IT staff. Next, a minimum viable product is evolved to a more scalable level, eliminating the manual effort.

Throughout the process, a programming interface is used to move more and more data from legacy systems to strategic and reusable components, ultimately leading to a service-based strategic solution. Although legacy systems may never go away, they can be wrapped in new front-end and intermediate systems that communicate with older technology in a way that enables the new and improved omnichannel customer experience.

Just as consumers have fundamentally changed, so too will the life-insurance business. Carriers who do not act to transform their interactions with consumers and put customer experience at the heart of their organization will find themselves relegated to selling undifferentiated products that not many customers are eager to buy. In the end, digital life insurance is less about technology and channels than about embracing a new way of thinking and working.

#areteautomation #lifehealthadvisors #thisis4u #knowledge #learning

Credits: Prashant Gandhi, Jon Kowalski, Parker Shi, and Marc Singer

Date: April 17, 2017

*‘With felons, you run up against that unknown moral factor”*Life insurers rarely cover inmates in prison, so they are unlikely to leave anything behind but their dead bodies.“We do not offer life insurance coverage to any incarcerated individual,” said Janet Gillespie of Prudential individual life insurance, according to a June 9 Fox Business website article Does Life Insurance Cover Prison Inmates? by Jay MacDonald. “Our underwriter feels this is industry wide.”Issuing a policy to someone in prison is “just not the kind of risk that the industry would take,” said Jack Dewald, president of Agency Services Inc., in Memphis, Tenn., according to the Fox article.Problems insurers cite is that there is no easy way to conduct a health exam on a prisoner, inmate access to financial assets is typically restricted and imprisonment casts broad uncertainty over the motives of both the insured and their beneficiaries. Additionally, there are the inherent dangers that come with being in prison, the uncertain mental health of the population and the “moral hazard” of insuring someone who has run afoul of the law, according to the article.Inmates in California could overcome some of the obstacles. Inmates can get checkups at their facilities. Copies of their medical records can be released by signing a form, according to California Code of Regulations, Title 15 3261.2 Authorized Release of Information.In addition, inmates can earn an income sufficient to pay premiums from prison. Wages range from $12-$56 a month for average prison jobs and as much as $153 a month if working for the Prison Industry Authority. “We can make up to 95 cents per hour for an average 34-hour work week,” said Antonio Manning, a PIA worker. Joint Venture and even selling handicraft could also provide sufficient income for prisoners to pay premiums (CCR Title 15, 3104(a) Inmate Handicraft sales).Also, inmate accounts can function like bank accounts. Inmates can sign trust withdrawals to have checks sent where they want. Additionally, once the inmate registers his or her Social Security number, the State Treasury pays out interest on the funds in his or her account, according to CCR Title 15, 3099 Inmate Trust Accounts.

“We can make up to 95 cents per hour for an average 34-hour work week”

Insurance companies say they are willing to insure daredevils, but not inmates because, “The high-risk element is something we can get our head around because it’s not a moral issue; the guy wants to live and he wants the stunt to go well. With felons, you run up against that unknown moral factor,” said Ted Tafaro, CEO of Exceptional Risk Advisors, a Mahwah, N.J., specialty insurer and Lloyd’s of London underwriter, according to the article.There are a few exceptions. Those who entered prison with preexisting individual policies in place are guaranteed coverage if they pay their premiums and don’t die while committing an intentional criminal act, expressed Dewald in the article.Group life coverage through an employer is typically lost unless converted to an individual policy before entering prison, according to the article.A modest death benefit is available in some states from ProCon Membership Community in West Palm Beach, Fla., for a monthly fee of $9.99 to $12.99, says the article.

Credits: Rahsaan Thomas

Date: August 26, 2014

Can someone buy term life insurance on my life without my knowledge or permission?

Fortunately having someone buy term life insurance on you without your consent is almost impossible, but it’s important to understand the steps you should take if it occurs.

Buy Term Life Insurance with Confidence

Life insurance companies implement numerous strategies to prevent insurance fraud. These obstacles allow insurers to verify an applicant’s identity and obtain express permission to move forward with coverage. These strategies include:

Application questions: When applying for life insurance, there are certain questions that the insurance carrier uses to verify identity. These questions include:

Full name

Street address

Social Security number

Driver’s license number

Employer information

Signatures: All life insurance applications require the signature of the proposed insured.

A release form: Most life insurance policies require the proposed insured to sign a consent form to release his/her medical information.

Phone interview: After submitting an application, the life insurance company will contact the proposed insured for a confidential phone interview to review the application’s accuracy.

A medical exam: After applying, most life insurance policies require the proposed insured to take a medical exam. The medical examiner will check the insured’s ID to ensure identity and will ask the insured many of the same questions from the application to verify answers.

Insurable interest: In order for someone to purchase life insurance on someone else, life insurance companies require insurable interest. Insurable interest means there has to be financial dependence. For example, spouses rely on one another’s income for their standard of living. In contrast, your neighbor does not have a financial interest in your life and could not buy term life insurance on you.

Steps to Take If Someone Did Buy Term Life Insurance on You Without Your Permission

After taking those safeguards into consideration, if you still think someone may have decided to buy term life insurance (or any type of life insurance) on you without your permission, there are steps you can take, but it may take some effort. It is not possible to just Google your name alongside the words life insurance to find out. Life insurance is personal, so protecting your privacy is important.

Step 1: If you think you know which life insurance company the policy in question was purchased from, you can call their customer service and explain the situation. They will be able to confirm if there is a life insurance policy on you and then help you make the appropriate steps to terminate it. There are many life insurance companies, however, so this option only realistically works if you know the name of the life insurance company.

Step 2: You can request your Medical Information Bureau records (MIB Consumer File). Life insurance underwriters use MIB’s services when assessing individual applications when they underwrite life insurance policies. Your consumer file may include the name of any MIB member company that:

Received a copy of the medical and personal information that MIB has in its database about you during the three-year period preceding your request;

Made an inquiry to MIB about you within the past two years.

It is free to request your MIB file. You will not have an MIB Consumer File unless you have applied for individually underwritten life, health, disability income, long-term care, or critical illness insurance within the past seven years (or earlier depending on applicable law) and the insurance company to which you applied (or its reinsurer) was an MIB member company that submitted an MIB inquiry.

If you get a letter stating you don’t have an MIB file, you can rest assured there is likely no life insurance policy out there on you.

If you do receive a file, you can look for any companies that you did not personally apply to and contact them.

Step 3: You can hire policy locator services. There are online services that for a fee will send out emails and letters to life insurance companies on your behalf to discover if there is a life insurance policy in your name. The MIB website mentioned earlier is one company that offers this service.

It costs $75 and it is important to note that the locator service generally will not report on policies with a $100,000 face amount or less, guaranteed issue life insurance policies, employer-based life insurance policies, or military-issued life insurance policies.

Credits: Natasha Cornelius

Source: https://www.quotacy.com/can-someone-buy-life-insurance-on-me-without-my-consent/

When applying for Medicaid many people often forget about life insurance. But depending on the type of life insurance and the value of the policy, it can count as an asset.

In order to qualify for Medicaid, you can’t have more than $2,000 in assets (in most states). Life insurance policies are usually either “term” life insurance or “whole” life insurance. If a Medicaid applicant has term life insurance, it doesn’t count as an asset and won’t affect Medicaid eligibility because this form of life insurance does not have an accumulated cash value. On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset.

That said, Medicaid law exempts small whole life insurance policies from the calculation of assets. If the policy’s face value is less than $1,500, then it won’t count as an asset for Medicaid eligibility purposes. However, if the policy’s face value is more than $1,500, the cash surrender value becomes an available asset.

For example, suppose a Medicaid applicant has a whole life insurance policy with a $1,500 death benefit and a $700 cash surrender value (the amount you would get if you cash in the policy before death). The policy is exempt and won’t be used to determine the applicant’s eligibility for Medicaid. However, if the death benefit is $1,750 and the cash value is $700, the cash surrender value will be counted toward the $2,000 asset limit.

If you have a life insurance policy that may disqualify you from Medicaid, you have a few options:

Surrender the policy and spend down the cash value.

Transfer ownership of the policy to your spouse or to a special needs trust. If you transfer the policy to your spouse, the cash value would then be part of the spouse’s community resource allowance.

Transfer ownership of the policy to a funeral home. The policy can be used to pay for your funeral expenses, which is an exempt asset.

Take out a loan on the cash value. This reduces the cash value and the death benefit, but keeps the policy in place.

Before taking any actions with a life insurance policy, you should talk to your attorney to find out what is the best strategy for you.

Credits: Chambliss, Bahner & Stophel, P.C.

Source: https://www.jdsupra.com/legalnews/can-life-insurance-affect-your-medicaid-7795858/

It starts with funeral expenses — but goes much further

Life can be unpredictable. PARAMOUNT/COURTESY EVERETT COLLECTION

If you’re single or childless — or both — there’s a chance you might not have given life insurance much thought. But there are several reasons you might want to think again.

The first might be the most obvious: funeral expenses. A traditional funeral can cost more than $10,000, so owning a small policy to pay those expenses, rather than leaving them to your heirs, may be a good idea. (If you have already purchased a prepaid funeral plan that allows you to fund funeral expenses before death, most of your expenses will be covered. However, expenses from a protracted medical illness wouldn’t be, so a small life insurance policy could still be in order.)

There are other uses for life insurance, however.

You can use it to retire debt. State laws vary, but assets owned at death are generally reduced by outstanding liabilities before they’re passed on to heirs. Consequently, an insurance policy with a death benefit equal to the current amount owed — it could include such obligations as mortgage, an auto lease or loan, or credit card debts — can help ensure that your entire estate can pass on to your loved ones.

An important exception to this need is student loan debt. If your student loan is federally sponsored, it can be discharged upon death. Additionally, Plus loans (Parent Loans for Undergraduate Students) are forgiven when the student or parent dies. (Keep in mind that the amount forgiven is considered taxable income upon the death of the student.)

Private loans, however, are generally not forgiven upon death and would need to be included when calculating the amount of life insurance to buy.

You can get access to “accelerated benefits.” As a single person, you most likely only have your own personal resources to access in the event of a major illness or injury. Most life insurance policies sold today include a provision that accelerates a large percentage of the death benefit during your lifetime upon the diagnosis of a terminal condition.

The policy typically defines a terminal condition as one which is expected to result in death within a specified period, sometimes 12 months. These “living benefits” are extremely helpful in paying the medical costs associated with a terminal illness or injury.

The accelerated benefit may even afford access to lifesaving procedures or medications that your medical insurance will not cover, including those that are declined due to their cost, experimental procedures or medications, or those only offered overseas.

These living benefits, however, should not be purchased in lieu of disability insurance or long-term care insurance. Those policies fill different needs.

You can guarantee insurability later in life. Life insurance is usually medically underwritten, which means that the insurance company will ask about your medical history. Some conditions can increase your premiums or lead an insurer to decline to issue a policy, so purchasing a policy when you’re younger and healthier could lock in access to coverage later even if medical complications arise — which can be valuable even if your family or relationship status changes.

Additionally, since older applicants are normally charged higher premiums than younger insureds, you can lock in lower premiums by purchasing a policy when you are younger. Since you will never be younger than you are right now, the premiums will never be lower. (A good time to purchase a policy is after an increase in your income, when you can utilize new money that hasn’t been allocated to other expenses.)#thisis4u

Finally, a note about employer-offered group life insurance. Many large employers offer insurance benefits of one or two times the employee’s income, while smaller companies might provide flat amounts, such as $10,000 or $25,000. (In some cases, you can increase your coverage through medical underwriting, though you should shop for other offers in that case.) Depending on your needs, this might be sufficient for you.

But there are some caveats. Group insurance generally ends when you leave the employer, which could be problematic should you be uninsurable at that time. Additionally, group life insurance premiums are generally higher than comparable options available on the open market, and they increase every five years, which can make them very expensive at older ages.

Credits: Clark D. Randall

Date: Dec. 15, 2017

Insurers amending applications to ask about virus

Survivors risk higher rates, rejections

The Covid-19 pandemic was barely underway in the U.S. when life insurance companies started wrestling with whether to sell new policies to people who survived the virus.

The Delaware Department of Insurance started seeing it in June. Companies filed requests to change their application forms to specifically ask applicants if they’d had Covid-19. The Interstate Insurance Product Regulation Commission — which uses a uniform set of standards to regulate insurance products for 44 states, the District of Columbia, and Puerto Rico — has approved 32 such requests since March. It’s also known as the Insurance Compact.

Millions of people who survived Covid-19 are expected to be dealing with medical issues including heart, kidney, and lung damage long after the pandemic subsides. But the long-term effects on mortality are unknown, even for those who had mild or asymptomatic cases. That’s left life insurance companies without the risk data they typically rely on in deciding who to cover, meaning survivors could have a harder time getting coverage or have to pay more for skimpier plans.

Insurance companies are afraid, said Bob Hunter, director of insurance at the Consumer Federation of America and a former Texas insurance commissioner. “This is classic insurance reaction. They did it after AIDS and SARS,” he said.

Individual and group life insurers can’t add riders to their policies to refuse to pay out benefits if someone dies of a specified illness like Covid-19, under the Insurance Compact’s standards.

But Hunter said he’s not aware of any state regulations that stop insurance companies from underwriting against a disease like Covid-19. Some survivors have already been denied a policy because they tested positive.

Due to Diagnosis

It happened to Lisa Moyles, 57, of Stratford, Conn.

“Our decision was due to your medical history, including your recent diagnosis of COVID-19,” Symetra Life Insurance Co. told the intellectual property attorney in an April 14 letter denying her a term life policy. That was two weeks after she had tested positive for the novel coronavirus. Symetra Life Insurance Co. is a subsidiary of Symetra Financial Corp., which was acquired in 2016 by Sumitomo Life Insurance Co., a leading life insurer in Japan.

Moyles and her wife, Lise Beaudry, started showing symptoms of Covid-19 at the end of March, shortly after coming home from a trip to Aruba. The couple got tested and received positive results within hours of each other on April 1.

“I can say it’s the sickest I’ve ever been,” said Moyles, who recovered without having to be hospitalized. Aside from some lingering nerve pain on the bottom of her feet, she said she’s fully recovered.

Symetra also denied Beaudry, 66, a policy. The denial letter she received Sept. 21 didn’t specifically cite her Covid-19 diagnosis as a reason. The company said its decision was based on Beaudry’s “medical history,” which included records the company obtained from her doctor. Beaudry also recovered from Covid-19 without having to go to the hospital and says she doesn’t have any other pre-existing conditions.

Not ‘Disqualifying Event’

In an email, a Symetra spokesperson said “policies are approved, denied or postponed based on multiple factors, including medical history,” and the company can’t comment on a specific application.

But “a past COVID diagnosis is not in and of itself a disqualifying event, nor do Symetra applications feature any COVID-specific questions,” the spokesperson said. “Our goal is to deliver life insurance coverage to our customers to the best of our ability when they need it, in both challenging and good times.”

An application form for individual life insurance, which Symetra sent to the Insurance Compact for approval on Oct. 8, however, asks applicants, “Have you been diagnosed or treated by a medical professional for COVID-19 (SARS-CoV-2)?”

The Symetra spokesperson said that application form is for a new term product the company is developing but isn’t planning to launch until 2021.

Some companies have created a separate Covid-19 questionnaire in addition to their regular applications for new customers.

Banner Life Insurance, a Frederick, Maryland-based unit of Legal & General America, is asking applicants if they’ve been diagnosed by, sought treatment from, been given medical advice by, or examined by a member of the medical profession for a fever, cough, shortness of breath, fatigue/tiredness, a runny/watery discharge from the nose, or a sore throat in the last 30 days, according to a form filed with the Insurance Compact. Legal & General America is owned by Legal & General Group Plc.

The company also wants to know if applicants have been hospitalized, for how long, and if they’ve fully recovered. In a statement, Legal & General America said it doesn’t preclude applicants from obtaining a life insurance policy if they have tested positive for Covid-19.

“For the majority of applicants, a history of COVID-19 has no impact on their ability to obtain a life insurance policy,” the company said. “In the case of extreme illness from COVID-19 requiring hospitalization or ventilation, applicants are assessed on a case-by-case basis — as with all illnesses — because the underwriting process can vary by state and includes a comprehensive review of the applicants’ health history.”

Applying for life insurance is an involved process. Applicants have to provide their medical history and may be required to undergo a medical exam. But insurers don’t have to specifically ask about Covid-19 to find out if an applicant has tested positive.

“There are already questions baked into the application that ask, ‘Have you been in the hospital in the last five years?’ ‘Have you seen a doctor?’” said Karen Schutter, the Insurance Compact’s executive director. “There are already general questions that would elicit Covid information.”

The Insurance Compact put out guidance at the start of the pandemic telling insurers not to ask if an applicant has Covid-19 symptoms. Insurers, however, can ask if an applicant has been diagnosed with Covid-19, or if they’ve been treated, tested positive for, or been given medical advice for the virus.

Connecticut Complaints

The Connecticut Insurance Department explicitly warned insurers in an April notice against filing application forms for review that include medical or other questions related to Covid-19. The department said it has received eight complaints specifically related to Covid-19 claims, but found only one issue: John Hancock Life Insurance Co. was improperly asking Covid-19 questions in sales materials.

John Hancock said the Connecticut complaint was related to instructions for completing applications that were intended to help assess Covid-19 risk.

“The complaint was resolved promptly when we discontinued those instructions after hearing from the Connecticut Department,” the company said in a statement.

Moyles and Beaudry started applying for term life insurance through Symetra before the pandemic hit and weren’t asked about Covid-19. Both wanted to upgrade their life insurance to broader policies that include a payout of $250,000 in case of death and coverage for long-term care, should it be needed.

“They had our applications for months and as soon as we get our results, we’re denied,” Moyles said.

Each life insurer has a duty to consumers under state law to treat people with similar health characteristics with an even hand and regularly assesses health and mortality developments, Jack Dolan, a spokesman for the American Council of Life Insurers, said in an email.

“While COVID-19 will inform underwriting, life insurance is a dynamic business, and companies want to write new policies,” he said. “This pandemic won’t stop them from offering in the future even more than the nearly $20 trillion in financial protection they’re providing today for families and businesses large and small across the country.”

Shop Around

Afraid as they may be of writing policies for people who may die prematurely, insurers also take a financial risk in denying Covid-19 survivors coverage in the absence of data.

“If you guess that people have a higher mortality and they don’t, that means you are denying people access to coverage and passing up business that could be profitable,” said Daniel Schwarcz, a professor at the University of Minnesota Law School, whose research focuses on insurance law and regulation.

On the flip side, insurers could end up paying a higher rate of claims 20 to 30 years down the road, he said.

Consumer advocates like Ruth Susswein, deputy director of national priorities at Consumer Action, recommend people shop around for multiple quotes before applying for a policy. Consumers should check not only the cost but the amount of coverage being offered, she said.

If you can demonstrate you had the disease, recovered fully, and are otherwise in good health, you probably have a wide open marketplace, said Steven Weisbart, chief economist at the Insurance Information Institute, a nonprofit trade association for the insurance industry.

The one thing consumers can’t do, advocates said, is lie on an application. Insurers can refuse to pay out death benefits if they find out a policy holder knew they had a disease and failed to disclose it, Hunter said.

“That could leave your loved one without the money you would have hoped,” he said.

Moyles and Beaudry know life insurance is something they should have, but their financial adviser has recommended tabling efforts to gain a new policy for now.

“I think we’re discouraged enough to just be done with it,” Moyles said. “We’ll have what insurance we have and that’ll be the end of it.”

Credits: Lydia Wheeler

Source: https://news.bloomberglaw.com/health-law-and-business/covid-unknowns-leave-survivors-fearing-life-insurance-rejection