Term Life Insurance Articles
Waiting Periods And Their Importance In Term Life Insurance
2011-01-07
When seeking benefit information and life insurance quotes, one should also read the fine print; especially if it pertains to waiting periods. There are common misconceptions about waiting periods that insurance policy seekers should know about. And, in fact, a policy seeker should rest assured know that these waiting periods are important when it comes to consumer protection.
There are two different types policies one will find when seeking life insurance quotes; one being guaranteed issue life and other being universal life. The difference between the types is that a guaranteed issue policy is usually purchased by one who did not qualify a fully underwritten universal policy; perhaps because of pre-existing conditions or other matters.
In a guaranteed issue policy, there may be a waiting period of two years before the policy can be considered in full force. If a policy holder were to die prior to the policy being in full force no benefit would be paid; however, all premiums plus interest would be returned. Of course, if one dies when the policy is in full force, one receives the benefit.
In a fully underwritten universal policy, there is the matter of what is called "two year suicide and contestability." Since one would be required to complete and pass a physical examination in order to qualify for this type of policy, one may qualify for the full benefit if one were to die during the first two years of the insurance. That said, the two year suicide and contestability clause is written into most policies in order protect insurance companies from policy seekers who may have other motives in wanting the full benefit of the policy during the first two years of the benefit. In other words, if one purchased the policy to simply commit suicide and enrich their beneficiaries, the insurance company is then protected.
The contestability part of the clause, though, protects insurance companies from those who may misrepresent themselves on the insurance policy application. During the first two years of the policy, the death in question will be reviewed to ensure that the policy holder did not misrepresent themselves on the application by perhaps not mentioning a pre-existing condition, or perhaps misrepresenting various habits that insurance underwriters may find too risky. Obviously, if all involved have been honest, and if the purchasing process has been completed effectively, then all sides have nothing for which to worry.
Ultimately, these waiting periods are about consumer protection. Although some may find these waiting periods a tad inconvenient, consumers must remember that it is those that attempt to game the system that cause the need for precautionary measures. These measures will only improve the insurance purchasing process.
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When seeking benefit information and life insurance quotes, one should also read the fine print; especially if it pertains to waiting periods. There are common misconceptions about waiting periods that insurance policy seekers should know about. And, in fact, a policy seeker should rest assured know that these waiting periods are important when it comes to consumer protection.
There are two different types policies one will find when seeking life insurance quotes; one being guaranteed issue life and other being universal life. The difference between the types is that a guaranteed issue policy is usually purchased by one who did not qualify a fully underwritten universal policy; perhaps because of pre-existing conditions or other matters.
In a guaranteed issue policy, there may be a waiting period of two years before the policy can be considered in full force. If a policy holder were to die prior to the policy being in full force no benefit would be paid; however, all premiums plus interest would be returned. Of course, if one dies when the policy is in full force, one receives the benefit.
In a fully underwritten universal policy, there is the matter of what is called "two year suicide and contestability." Since one would be required to complete and pass a physical examination in order to qualify for this type of policy, one may qualify for the full benefit if one were to die during the first two years of the insurance. That said, the two year suicide and contestability clause is written into most policies in order protect insurance companies from policy seekers who may have other motives in wanting the full benefit of the policy during the first two years of the benefit. In other words, if one purchased the policy to simply commit suicide and enrich their beneficiaries, the insurance company is then protected.
The contestability part of the clause, though, protects insurance companies from those who may misrepresent themselves on the insurance policy application. During the first two years of the policy, the death in question will be reviewed to ensure that the policy holder did not misrepresent themselves on the application by perhaps not mentioning a pre-existing condition, or perhaps misrepresenting various habits that insurance underwriters may find too risky. Obviously, if all involved have been honest, and if the purchasing process has been completed effectively, then all sides have nothing for which to worry.
Ultimately, these waiting periods are about consumer protection. Although some may find these waiting periods a tad inconvenient, consumers must remember that it is those that attempt to game the system that cause the need for precautionary measures. These measures will only improve the insurance purchasing process.
