Should I Stop My Life Insurance Payments If My Income Has Fallen?
Published On Nov 15, 2021 10:00 AM By InsuranceDekho
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A contract between an insurer and a policy owner is known as life insurance. In exchange for the premiums paid by the policyholder during their lifetime, the insurer promises to pay a sum of money to named beneficiaries when the life assured
Life insurance functions as a backbone to all financial troubles that the policy’s beneficiaries might face in case of an unfortunate event in the future. As a result, it is a decision that necessitates careful consideration and forethought. In this article, are options you can consider before ending your life insurance policy permanently.
Ways That Can Save Your Insurance Policy
Here are some ways you can make use of to save your life insurance policy when faced with financial troubles.
1. Reduce The Policy Value
The first step involves contacting your insurance agent and letting them know about the situation. Inquire with your insurer about the possibility of converting back to your original benefit level, as well as whether you'll have to take another life insurance medical exam or go through additional medical underwriting to do so. Inquire about whether your premium will be determined by your age at the time the insurance was issued or the age at which you increased the benefit.
2. Activate The Premium Waiver Option
Waiver of Premium is an option that can be included in your insurance plan or added later as a rider.This provision assures that, in the event of the policyholder's death, the insurance continues uninterrupted by waiving any future premiums. In case of inability to pay the premium, policyholders can turn to this alternative provided by the company.
If you're unable to pay the premium due to a disability, the waiver usually kicks in. Some riders, however, are exempt from paying premiums due to unemployment.
However, before the waiver rider kicks in, there is usually a waiting period during which you must continue paying payments. As a result, if you require immediate financial assistance, this alternative will not be perfect.
3. Use Your Policy Grace Period
Most insurance firms provide consumers a 30-day grace period beyond the due date to pay their premium. You can usually go another 30 days without paying, and the policy will be marked as "lapse pending,". It is advised that consumers who are experiencing temporary financial trouble take advantage of this feature provided by the company.
4. Policy Cash Out
The policy can be redeemed. This means you can cease paying your premium and take advantage of your financial savings. Although you will no longer be covered by life insurance, you will be able to save some of the policy's proceeds. If the cash value exceeds the amount you paid in premiums, you may have to pay taxes on some of it.
Before settling upon the final decision that can not be reversed, it is recommended discussing the benefits and drawbacks of the options listed in the above article with your insurance agent or financial advisor. It would be a wise decision to avoid making hasty decisions regarding your life insurance to solve a momentary financial problem.
You may also like to read - Not Quite Sure How Life Insurance Works? Read More About How It Can Protect Your Family's Financial Future.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.