Term Life Insurance Articles
Three Reasons Not To Let A Term Life Policy Lapse
2011-01-11
People do not buy term life insurance as an investment; they buy it for the financial security of their families and other beneficiaries. It is the simplest and most affordable way to protect them from financial hardship if you should die. Buying a term life insurance policy not only establishes immediate death benefits but if you do it right, it allows you to maintain those benefits for as long as you live. If you are the owner of a lapsed policy though, that opportunity may no longer be available to you.
Term life insurance policies can lapse due to non-payment of premiums or a failure to renew the policy among other reasons. Once this has occurred, the advantages of the policy features are obviously lapsed as well. Maintaining an up to date policy protects your ability to remain insured. Here are three good reasons not to let your term life insurance policy lapse.
Reinstating the policy is not like getting you water turned on after you forgot to pay the bill; it is far more involved. The only way to obtain life insurance again is to apply for a new policy. That means taking a health physical and a complete re-evaluation of your medical situation. There is no guarantee that you will be eligible for coverage. In addition, some companies will not issue a new policy to someone who has allowed a previous policy to lapse. You may end up without coverage.
Among the more valuable options of a term life insurance policy are conversion and the ability to renew. Conversion allows you to convert your temporary term policy to a permanent policy such as universal or whole life. These features insure that you can continue to have death benefits for as long as you live and after all, that's what life insurance is for. If you had a lapsed policy in the past, you have lost the ability to exercise those options. You may not have the opportunity to obtain those again in your next policy.
By applying for a new policy after yours has lapsed, you are not only applying on the basis of your current state of health, you are also applying under an entirely new set of premium considerations. Your original policy probably locked in your rates or at least, your rate increase levels. The replacement policy will be significantly more costly because you are older than when you obtained the last one. The rates may have gone up since then, and your health has diminished to some degree. For the best coverage and value, make sure to keep your term life insurance policy up to date.
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People do not buy term life insurance as an investment; they buy it for the financial security of their families and other beneficiaries. It is the simplest and most affordable way to protect them from financial hardship if you should die. Buying a term life insurance policy not only establishes immediate death benefits but if you do it right, it allows you to maintain those benefits for as long as you live. If you are the owner of a lapsed policy though, that opportunity may no longer be available to you.
Term life insurance policies can lapse due to non-payment of premiums or a failure to renew the policy among other reasons. Once this has occurred, the advantages of the policy features are obviously lapsed as well. Maintaining an up to date policy protects your ability to remain insured. Here are three good reasons not to let your term life insurance policy lapse.
Reinstating the policy is not like getting you water turned on after you forgot to pay the bill; it is far more involved. The only way to obtain life insurance again is to apply for a new policy. That means taking a health physical and a complete re-evaluation of your medical situation. There is no guarantee that you will be eligible for coverage. In addition, some companies will not issue a new policy to someone who has allowed a previous policy to lapse. You may end up without coverage.
Among the more valuable options of a term life insurance policy are conversion and the ability to renew. Conversion allows you to convert your temporary term policy to a permanent policy such as universal or whole life. These features insure that you can continue to have death benefits for as long as you live and after all, that's what life insurance is for. If you had a lapsed policy in the past, you have lost the ability to exercise those options. You may not have the opportunity to obtain those again in your next policy.
By applying for a new policy after yours has lapsed, you are not only applying on the basis of your current state of health, you are also applying under an entirely new set of premium considerations. Your original policy probably locked in your rates or at least, your rate increase levels. The replacement policy will be significantly more costly because you are older than when you obtained the last one. The rates may have gone up since then, and your health has diminished to some degree. For the best coverage and value, make sure to keep your term life insurance policy up to date.
