Questions to Ask Your Agent About Universal Life Insurance
When interviewing your agent about purchasing a Universal Life Insurance policy it is critical that you take the time necessary to feel confident and secure about the product you are purchasing. You must remember that a Universal policy lasts a lifetime, so the same care and commitment that you would provide in purchasing a home should be made toward the purchase of a product that is intended to protect your family. Some common questions asked of agents by their customers include:
Is a medical exam required? The answer is, not always. However, to get the best rates, a medical exam is usually a prerequisite. Many individuals who would like to purchase a policy might believe that this requirement will disqualify them as candidates due to a pre-existing condition. This is not always the case. Spend a few minutes searching the Web and you will find many “no-medical–exam” carriers, but buyer beware: carrier questionnaires are designed to find out if you are attempting to hide something. If it is found that you are, premium payments might not be refunded, and you could end up in jail.
What is the carrier customer complaint rate? Every state has a department of insurance that monitors the activities of insurance carriers doing business in the state. However, not all carriers are admitted insurance providers. The benefit of doing business with an admitted carrier is the ability of the policyholder to collect from the state guaranty fund in case the carrier files for bankruptcy. In addition, the state will accept complaints, which are available for review, and states have the power to take action against unscrupulous carriers and agents. In addition, there are numerous Internet websites available to research others’ opinions of insurance carriers and their products.
What happens if I miss a premium payment? It depends on the type of Universal Life policy you select. A single premium policy only requires a single initial premium payment and no further installments are required. A fixed premium policy does require equal periodic premium payments at defined due dates, so a missed payment could cause the coverage to lapse, depending on the specific terms of the policy. A flexible premium policy allows much more leniency, allowing the policyholder to skip an occasional payment and still keep the policy in force. However, be careful not to let the coverage lapse due to not funding the policy adequately.
How is a claim processed? What is the typical time frame? The terms of your policy will define the claim filing and time frame required to receive the death benefit. Typically, the carrier will require the beneficiary to complete a claim form, submit a certified copy of the death certificate, and return the original life insurance policy. If there is more than one beneficiary, each person will need to complete a claim form. It is critical to keep a copy of all documents submitted to the carrier. Further, the carrier is charged a penalty paid to the beneficiary that is compounded at 90 days if the benefit is not promptly received.
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