Tuesday, March 1st, 2011 | Shelley Fiore | |
So you’ve decided to buy life insurance to protect your family or business?
Good move.
But there’s more to the purchase than just signing on the dotted line.
You need to pay close attention to the policy add-ons that insurers offer. In the industry, these add-ons are known as riders. Like a warranty or guarantee for other consumer purchases, riders can give policyholders additional benefits and increase peace of mind—If something goes wrong, there’s a plan B.
And while they may vary in price, they are, at the very least, prudent to consider.
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The healthcare debate and the legislation that recently passed put a bright spotlight on the insurance industry, the insurance companies as well as agents and advisors. Much of what was said and portrayed in the press and on Capitol Hill was not favorable. But as often is the case, the larger picture being drawn is most often not the reality that people face in their day-to-day lives.
Let me share the stories of two of my clients that I think serve as real-life examples of how government, or mandated, benefits work vs. how insurance company benefits work.
Client A, age 48, was diagnosed with muscular dystrophy a few years ago. During this time, in the middle of the economic downturn, his job was outsourced. When he lost his job, he also lost his group disability insurance coverage and his only paycheck benefits. As the disease progressed, he was unable to work any longer.
In late 2008, he filed for Social Security disability benefits and was denied. You may not know it, but this is a common occurrence for first time filers of Social Security benefits. In fact, the industry statistics indicate that 65% of all Social Security claims are initially denied.
With my help, my client engaged an attorney who specializes in Social Security disability claims. A year and a half after filing and paying attorneys fees, he was approved for benefits.
Contrast this experience with Client B. He had a substantial life insurance policy with me that was scheduled to expire for lack of payment. When I spoke with the client’s wife, I learned her husband had been declared totally disabled four years ago, due to the effects of exposure to Agent Orange when he served in Vietnam. The family had never shared this information with me.
I informed them that his insurance policy had a “waiver of premium” benefit, which meant that if he were to become disabled and unable to work, his life insurance premiums would be paid by the company for the rest of his life.
Once the client sent me the documentation I needed, the insurance company sent the client a refund check for those four years’ worth of premiums that they had paid. And now the policy is now paid for life! The whole process took just over a month, and there were no attorney fees and no hassle.
I leave it to you to decide: Which “system” worked better? The government’s or the insurance industry’s? We all want reform, but we need to understand what that truly needs to be.
I recently ran across a yellowing sheet of paper with a typewritten letter; it was a copy of a note I had sent to my son. The date on the letter was Nov. 21, 1989, and my son, who is now in college, was just four months old at the time. As I read it again after 20 years, I realized something: Although I was telling him about the life insurance policy we had just purchased for him, it was, in fact, a love letter.
Love letter, you say? What has life insurance got to do with love? Well, quite a lot, it turns out. The bottom line is that you buy life insurance because you love people and want to protect them financially.
I may be biased because I work in the industry, but take a look at the letter to my son, and see if you don’t agree:
Dear J.P.:
Today is November 21, 1989, and possibly you are wondering what the date has to do with writing you this letter.
While you are only four months old at the present time, I hope that this is a date you will remember, because today we purchased for you a life insurance policy. It is one like we have and it will be for your use for the rest of your life.
J.P., the difference between financial success and failure is often determined by whether or not a person can discipline themselves in a consistent and conservative financial strategy. Life insurance is ideal in this respect because it has withstood the test of time both for family security and savings; it’s the greatest savings plan in the world because IT WORKS!
It may be that you will have to call upon the cash value of this policy many times during your lifetime and, at such time, we hope you will remember that we started this for your benefit.
This policy carries with it two features of particular significance. The first is an automatic purchase option, which will allow us to increase your coverage as you attain certain ages. The other feature is one that has been very meaningful to me in my financial life and it is called disability waiver of premium. This means that in the event you should ever become disabled, your financial plan will be self-completing for you and your family.
This policy is a special gift of love and affection from both your mother and me; and we suspect that it will be remembered long after all other gifts are forgotten.
May God’s blessings be with you always.
Love always,
Dad and Mom
As Valentine’s Day approaches, why not consider the gift of life insurance? It may be a policy like the one I purchased, for a child or grandchild, or it may be a policy you buy for yourself with your loved one as the beneficiary. We express our love in many ways, and offering financial security is most certainly an important one. Click through to www.insureyourlove.org to find out how you can do it, too.
Monday, December 11th, 2006 | David F. Woods | |
"Waiver of Premium". Say what??
The insurance industry is famous for confusing jargon despite the fact that most states require policies to be written in language an eighth grader can understand. The unfortunate result is that many people's eyes will glaze over when they’re reviewing a policy and they’ll often miss an important point or feature – or worse, fail to buy insurance they need because they’re too confused. One good example is "Waiver of Premium".
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