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Pointers
For Policyholders
Take advantage of group life insurance coverage. The costs to
you are very low compared with individually obtained policies.
Read your insurance policy. Be sure you
understand its basic provisions and benefits. Don't hesitate to ask
questions. Ask your agent, or write the company or your state
insurance department.
Review your insurance needs. Choose the kind of policy that has
benefits that
most closely fit your needs. Consider the number
of people who are dependent upon you financially and whether or not
you need life insurance. Will you have substantial debts and taxes owed after your death? Do you have
alternatives to life insurance, such as savings accounts or other
investments that could take care of expenses after your death?
Keep your policy in a safe place. Let your beneficiaries know
where your policies are. Your beneficiary must turn the policy over
to the company and give proof of your death before collecting on the
insurance. If your policy is lost or destroyed, your company will
issue you another copy, as long as you have the policy number.
Discuss your insurance with your family and
other beneficiaries. Have them share in planning the life insurance
program. Also discuss each addition or change in the program with
them. It is a good idea to write a letter (put in a safe place)
describing your insurance policies. State any choices the
beneficiary may have in settlement. Point out that your life
insurance agent will help your beneficiary fill out the "proof of
claim" papers.
Know your options. There are two basic types of life
insurance: term insurance and cash-value insurance. You may wish to combine cash-value life insurance
with term insurance for the period of your greatest need for life
insurance to replace income. Make sure the price is right.
If the premium increases later and you still need insurance, will
you be able to afford it?
Review your insurance program periodically. The wise person will
review insurance coverage from time to time, particularly when there
is a change in family situation, for example when children are grown
and have left home. Insurance that was sensible for you at age 20
may no longer fit your needs when you are 40 or 60. Get help when
you rearrange your insurance program to meet your changing needs.
Keep your insurance company informed of your address. This is
important so the company can send your premium notices and perhaps
other important notices.
Consider buying a disability
waiver-of-premium clause. For just a few dollars more a year, your insurance will
remain in force if you should become disabled and unable to
pay the premium.
Know your company. You can check the
financial stability of any life insurance company through several
reputable national rating companies. Some of these ratings are
available at public libraries. Check with your state insurance department to verify that
the company is authorized to do business in your state.
Use dividends to buy additional insurance coverage.
Consider replacement cost. It may be costly
to replace your insurance if you change your mind during the early
years of the policy. Don't drop one policy and buy another without a
thorough study of the new policy and the one you currently have.
Don't let life insurance dividends accumulate with the insurance
company if they could be earning more money somewhere else and if
you have the willpower to follow through with such an investment
program.
Never finance cash value life insurance.
Check out companies who offer discounts on
premiums for people who do not smoke, if you are a
nonsmoker.
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