Certain words signal trouble ahead when they apply to your life
Here are some of the worst words that can be connected to your
coverage -- and what you can do about it.
If you apply for
and are declined, it will likely be even tougher to get approved in
"It is a red flag," says Ernie Rongish, an actuary and vice
president of life and annuity product performance at Mutual of
Omaha. "We would want to know the circumstances around that."
Curt Lundquist, a life insurance manager at Allstate, calls a
decline "a pretty serious result" and one that is likely to be
Rongish says that once you are turned down for a policy, life
insurance companies that later approve your application may rate
you as "substandard" and charge you a higher premium.
Still, there is hope, says Marvin Feldman, president and CEO of
the nonprofit Life and Health Insurance Foundation for Education
(LIFE) in Arlington, Va. "A declination doesn't mean a declination
from all companies. Every company underwrites differently."
For example, Feldman says one carrier may charge an applicant
with heart disease more than others would. He recommends seeking
help from an insurance agent or
who can help guide you toward insurance companies more likely to
approve your application.
"They know where to go and what questions to ask," he says.
Failing to pay your life insurance premiums on time could lead
to a lapse in coverage. And once your coverage lapses, it may be
difficult to reinstate the policy.
Typically, a life insurance company gives customers a grace
period of 30 or 31 days after a due date has been missed before a
policy will lapse, Feldman says. So if you're a couple of weeks
late on a payment, check the details of your policy's grace period
and get that payment in ASAP.
"Pay the premium within the grace period according to your
policy and it will be back in good standing," Lundquist says.
If your lapsed policy cannot be reinstated, you will need to
apply again and there's no guarantee that you will be approved,
says Rongish. "It wouldn't be automatic."
Benjamin Blakeman, a Los Angeles-based attorney who handles life
insurance and investment cases for consumers, advises you to do
everything you can to avoid lapsing a policy.
"Beg, borrow and steal money to pay a life insurance company,"
Blakeman says. "You have to prove you're insurable after a policy
Here's more about
Insurance grace periods: When do you get cut
You may be at a loss about where to try to find a relative's
missing life insurance policy.
"You actually have a lot of options," says Feldman.
He recommends using the
from the National Association of Unclaimed Property Administrators
for tracking down the contact information for government unclaimed
programs in each state and visiting MissingMoney.com to conduct a
free, multi-state search for unclaimed life insurance policies.
Another option is using MIB Solution's policy locator service,
which charges $75 to search its database of life insurance
application records in its database.
Here's more on how to find lost life insurance.
Some families grieving the sudden, unexpected shock of a loved
one's suicide may receive a second shock when they attempt to
collect death benefits from the deceased's life insurance
"Generally, the rule is if you commit suicide within two years
of getting a policy, the company won't pay," Blakeman says.
Most people aren't aware of the two-year provision regarding
suicide in life insurance policies, Feldman observes.
"If someone commits suicide within the first two years of the
contract, the contract is null and void," Feldman says. "After two
years, it pays the full benefits just as death from any other
If you want to get out of a permanent life policy without just
walking away from your investment, you can surrender it for the
cash value. But you may get stuck paying a surrender fee. Still,
it's better than getting nothing after years of premium
"Most cash-value policies have surrender charges that decline
over a period of time," Blakeman says. "That's often 10 years, but
it could be 12 or 15 years."
After that, you'll generally pay no surrender charge or a very
small surrender charge, Blakeman says.
For details about surrender charges, he suggests that you check
your life insurance policy or call your life insurance agent.
Here's more about the basics of permanent life insurance.