Term Life Insurance Articles
Reasons A Term Life Claim May Not Be Paid
2011-05-08
For those considering purchasing life insurance, there is no question that the best value for the money lays in a term life insurance plan. Term life insurance rates are considerably lower than whole life or permanent insurance rates, enabling the policyholder a larger face value for an equal premium amount. The downside is that term coverage has no cash accumulation value and, according to statistics, most term insurance policies are either discontinued or allowed to lapse before a claim is ever paid. If you want the highest amount of payout in the event of a death, relative to policy cost, however, term is definitely the way to go.
The idea of a term life insurance plan is to provide protection for the insured, by way of a specific cash payout to the policyholder's named beneficiary, in the event of death while the policy is in force. Term life insurance rates, meaning the cost of the policy, will vary depending on the age and health of the insured as well as the company underwriting the policy. It's important to understand the provisions, including stated exclusions; of any particular policy you're considering buying.
Most term life insurance policies will contain a list of restrictions that apply to the circumstances surrounding one's death in the event a claim is made. If suicide is suspected, for example, official cause of death may have to be determined before the death benefit claim can be paid. In some policies, suicide of the insured may nullify a claims payment as suicide may be excluded in the policy provisions. Some policies may exclude suicide for only a specific period of time, such as two years from the date the policy is written.
Other common exclusions to a term life insurance plan claims payout include the insured's death being the result of any act of war. Some policies may exclude aviation accidents or other high-risk activities such as skydiving, car racing or mountain climbing. This is another reason why it is so important to understand each and every provision contained in any insurance policy you are considering obtaining.
If a term life insurance policy lapses due to unpaid premiums and the insured dies during this uncovered period, benefits may also be withheld. Most policies will include a stated grace period, however, where coverage may continue for a certain period, typically 30 days. Reinstatement of a policy that has lapsed may be available, providing the insured is still considered insurable. As an alternative, a new policy can be taken out, although the new term life insurance rates will most likely be higher than the old rates. This is a decision that will require due consideration.
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For those considering purchasing life insurance, there is no question that the best value for the money lays in a term life insurance plan. Term life insurance rates are considerably lower than whole life or permanent insurance rates, enabling the policyholder a larger face value for an equal premium amount. The downside is that term coverage has no cash accumulation value and, according to statistics, most term insurance policies are either discontinued or allowed to lapse before a claim is ever paid. If you want the highest amount of payout in the event of a death, relative to policy cost, however, term is definitely the way to go.
The idea of a term life insurance plan is to provide protection for the insured, by way of a specific cash payout to the policyholder's named beneficiary, in the event of death while the policy is in force. Term life insurance rates, meaning the cost of the policy, will vary depending on the age and health of the insured as well as the company underwriting the policy. It's important to understand the provisions, including stated exclusions; of any particular policy you're considering buying.
Most term life insurance policies will contain a list of restrictions that apply to the circumstances surrounding one's death in the event a claim is made. If suicide is suspected, for example, official cause of death may have to be determined before the death benefit claim can be paid. In some policies, suicide of the insured may nullify a claims payment as suicide may be excluded in the policy provisions. Some policies may exclude suicide for only a specific period of time, such as two years from the date the policy is written.
Other common exclusions to a term life insurance plan claims payout include the insured's death being the result of any act of war. Some policies may exclude aviation accidents or other high-risk activities such as skydiving, car racing or mountain climbing. This is another reason why it is so important to understand each and every provision contained in any insurance policy you are considering obtaining.
If a term life insurance policy lapses due to unpaid premiums and the insured dies during this uncovered period, benefits may also be withheld. Most policies will include a stated grace period, however, where coverage may continue for a certain period, typically 30 days. Reinstatement of a policy that has lapsed may be available, providing the insured is still considered insurable. As an alternative, a new policy can be taken out, although the new term life insurance rates will most likely be higher than the old rates. This is a decision that will require due consideration.
