7 Term Life Insurance Fine Print Nightmares - Avoid!



7 TERM LIFE INSURANCE FINE PRINT NIGHTMARES – AVOID!

Considering a term life insurance policy? Be aware and be prepared! Below are 7 items that you should look for in the fine print and do away with before it’s too late! You can get your own insurance policy at http://www.gio.com.au/personal-life-insurance/life-protection-insurance
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1.      
Time Limitation – or Exclusion – on Policy Type Conversion

A good term life insurance policy will offer you a conversion option – not forbid it. This conversion will allow you the option of exchanging your term policy for a whole life policy, should you choose to do so, at any time without having to prove your health all over again. Keep in mind that not all conversion options are necessarily good ones, just because they’re included, though – some won’t let you convert until you’re half-way through your term. For those that want to refinance and reevaluate their assets on the regular, this will prove to be an annoyance.

22.       No Renewal

Just because your term policy comes to an end, shouldn’t mean that it really has to come to an end. If you’re still alive and kicking, chances are you still want that policy. Don’t let the insurance company kick it to the curb and ask you to start over again – go with an insurance company that has an easy renewal system built right in.

33.       No Renewal Rate Guarantees
When you’re looking into the above, be sure to look into the rate renewal, as well. You don’t want to renew your policy thinking you’re good to go, on the same plan that you’ve been on for yours. Chances are good that a change could have occurred which will raise your rates every single year going forward. If you already face a medical condition, you especially don’t want to have to go shopping for a better policy, because this one decided to hike up the price.

44.       No Premium Guarantee

Your policy should come built to withstand the entire length of the policy’s term, guaranteed. If your fine print dictates that you premiums can go up after 10 years of a 20-year term policy, then it’s a no go. Premiums should be guaranteed, and locked into place, throughout the policy’s entire life.

55.       No Good Policies to Switch to at Conversion

Back to the conversion topic – say your policy includes conversion and you’ve already checked that one off of your list. Have you also checked to make sure that there’s a good enough policy for you to convert to when you do it? Some policies are very limited in what they offer at conversion, so be sure that you won’t end up with something later that you won’t want (i.e. an expensive whole life policy, or a Universal life plan).

66.       No Supplemental Protection for Critical Illness & Income-Loss Prevention

Something that very few policy-seekers think to look for in a term life insurance policy is supplemental protection that will cover them financially should critical illness strike resulting in a sudden loss of income. This same loss of income is what you family would endure should you die, so they should still be protected if you simply can’t work for a substantial period of time, due to a heart attack, or something similar. There are term life insurance plans that incorporate this kind of supplemental protection and they’re well-worth the peace-of-mind.

77.       Unstable Financial Rating

Last, but not least, before you even dive into all of the fine print of your policy and begin checking things off of this list, make certain that you’ve checked out your potential insurer’s financial rating. If their rating is low, that means that they’re not the most stable and could potentially go under, leaving you with a big problem to fix in order to maintain coverage while your state figures out its contingency plan. It’s a much better idea to just go with a stable, high-rated, insurance company right from the start and avoid the possible hassle entirely.

5 comments:

Lance @ Money Life and More said...

Thanks for sharing these tips. I personally wouldn't care about the option to switch to whole life insurance, but it is good to know about these fine print traps because I will be getting term life insurance in the next few years.

Victor said...

It does not matter how slowly you go so long as you do not stop.

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