Thursday, May 23, 2013

Insurance tips: Why are my life insurance premiums increasing?

Here's are some life insurance tips from our consumer advocacy department, which gets a lot of insurance questions:

With long-term products such as whole life insurance, annuities, or long-term care insurance, it can be difficult to know which product or company is the best. Companies often give an estimate of how they expect the products to perform, but realistically, only time will tell which company and product will perform the best. Don’t fall for high teaser interest rates or low-ball premiums that are adjustable.

Our agency receives a lot of complaints from people whose universal and other whole life policies are underfunded and become too expensive to maintain. It’s important to realize that when you buy a whole life product, you’re actually buying a schedule of mortality rates.

No matter how young you are when you buy the policy, as you age, your mortality charges will increase so you’ll need to pay more to keep the policy in effect. Review your annual statements and illustrations to stay on top of how your policy is performing so that you can make sure that you pay enough premiums to keep the policy in effect.

And then there's this issue: A lot of people who have life insurance policies don’t tell the beneficiaries that the policy exists. As a result, the beneficiaries don’t collect on the policies when the policyholder dies. (Partly as a result of this lack of communication, there’s an estimated $200 million in unclaimed life insurance benefits in the U.S.) Also, life insurance policies often lapse when a dying or disabled person quits paying the bills. Remember to keep your life insurance beneficiaries informed so that they can make a claim on the policy after you’re gone and so that they can make sure the policy doesn’t lapse beforehand.