- If my health changes after my policy becomes effective, can my policy be canceled?
- What about a rate increase in the event of changes in my health?
- What happens if I die within a year of purchasing the policy?
- If I die, how does my beneficiary make a claim?
- What happens when I reach the end of my term?
- Can I convert my term policy into a Permanent Life Insurance policy?
- Am I required to keep the policy for the full term, or can I cancel it at some point?
- Should I obtain more life insurance if I have a major life change (i.e., marriage, birth of a child, purchase of a house)?
1. If my health changes after my policy becomes effective, can my policy be canceled?
Absolutely not. Once your application is approved and placed in force, the life insurance company may not cancel your policy and must honor the terms and conditions under which the policy was issued, regardless of any changes in your health. However, most policies have an exclusion for suicide during the first two years of coverage, and insurers have a right to rescind a policy during the first two years if there has been a material misrepresentation in the policy application.
2. What about a rate increase in the event of changes in my health?
Again, as soon as you are approved and have paid, the rates are guaranteed for the length of the term. This is one reason why it is generally advantageous to buy term life insurance sooner rather than later, and for a longer term period. Chances are, your health is better now when you are younger and you can purchase a policy with less expensive premiums. If you wait until later in life, you risk a change in health that could result in more costly premiums, or the inability to qualify for a new policy.
3. What happens if I die within a year of purchasing the policy?
Many policies contain guarantees that will refund the cost of the life insurance, in addition to paying the death benefit, should you die within a year of buying your policy. A LifeSource Direct.com representative can provide you with more detailed information about this feature.
4.If I die, how does my beneficiary make a claim?
Your policy contains detailed instructions on how to make a claim. The death of a loved one is a traumatic experience and the survivors are left not only to grieve, but also to handle a number of tasks that are often unnecessarily burdensome. Those distractions can be avoided if you leave clear instructions with a loved one on what to do in case of your death. Take the time now to discuss with someone what life insurance you have, where you are keeping your policy and other valuable papers, and what steps they should take in the event of your death. It may sound like an unpleasant thing to discuss, but if you provide your family with advance instructions, it will lessen their burden during an already difficult time. We encourage you to consult with your legal, tax and financial advisors to set up or review appropriate estate planning arrangements.
5. What happens when I reach the end of my term?
At the end of your policy’s guaranteed term, your life insurance company will typically provide you with rates to continue your coverage up through age 95 or 100. Those rates can usually be increased each year. You can also apply for a new policy. However, a new policy will likely be more expensive than one you purchase now as you will have aged since you first purchased a policy. As well, your health condition may have changed and this may contribute to significantly higher premiums or your inability to qualify for a new policy. We recommend giving careful consideration to the length of your term. In many cases, it is more cost-effective to purchase a policy with a longer term than you think you will need instead of selecting a shorter term and when it expires, deciding to purchase a replacement policy. Depending on your specific needs, it may be appropriate to apply for two or more policies having different terms reflecting your expected life insurance needs.
6. Can I convert my term policy into a Permanent Life Insurance policy?
Oftentimes term life insurance policies contain “conversion” clauses that allow you to convert your term policy into a Permanent Life Insurance policy without any new health requirements. If you would like this option in your policy, please ask your LifeSource Direct.com representative for more information.
7. Am I required to keep the policy for the full term, or can I cancel it at some point?
You are under no obligation to keep your policy for the full term. You may cancel it at any time. Before doing so, however, be sure your insurance needs are met and your loved ones are not without the financial peace of mind that life insurance provides. It is important to note, however, that if your coverage is with a Permanent Life Insurance policy, there may be additional surrender charges and tax consequences involved. Be sure to speak with a professional before canceling or lapsing any permanent insurance policies.
8. Should I obtain more life insurance if I have a major life change (i.e., marriage, birth of a child, purchase of a house)?
Re-evaluating your financial plan and insurance needs after such milestone events is always a good idea. In doing so, you may find that additional insurance coverage is warranted to ensure your loved ones are properly protected. We encourage our customers who have undergone a major life change to take a few moments to reassess their financial plan.