Having a life insurance policy is an important step towards being prepared in the event of the death of a person. Yet, many people find that, just when they need the policy the most, it has been cancelled by the insurance company.
Fortunately, there are a number of things that a person may to in order to minimize the chances that the insurance company will cancel his or her life insurance policy. Here are some of the common reasons why an insurance company might cancel a life insurance policy, and some things you can do to keep this from happening to you. By taking these steps now, you can help ensure peace of mind for your family and loved ones.
Omitting or Falsifying Information in the Application
Getting a life insurance policy is not always easy and when you do find some you need to compare all the options. There is a lengthy application process to go through, which includes providing your health history, submitting to screening tests, and other things. What’s more, depending on things such as your family medical history, you may find yourself paying premiums that are higher than what you would otherwise expect.
Faced with this prospect, some people are tempted to fudge the facts a little bit on their application. While this may seem like an easy answer, it’s never the right choice. Discussions of ethical considerations aside, the fact of the matter is that if you make a material misrepresentation (or omission) on your application, the insurance company could end up canceling your policy.
The fix here is simple: tell the truth (and tell the entire truth). You might have to pay slightly higher premiums, but at least you’ll know that the policy will be there when you need it.
Falling Behind on Your Premiums
When you have a life insurance policy, you have to make sure that you are diligent about paying the premiums. You might get busy and forget, or you might find yourself in a tight financial spot and be tempted to skip the premium payments.
Missing the payments can often lead to the cancellation of the policy. So plan ahead, and do whatever it takes to make sure you make your payments.
Expiration of Coverage
Some types of life insurance only run for a span of years. For example, term life insurance coverage may last for 10, 20, or even 30 years. At the end of the term, the coverage expires automatically.
If you are not comfortable with the prospect of your coverage expiring on a set date, you do have other options. There are other types of life insurance policies available, although they may have higher premiums. In the alternative, you could inquire about purchasing a new policy that will begin on or prior to the date your current coverage is set to expire.
A Change in Eligibility
Some types of life insurance are offered to people in a specific class. For example, there may be life insurance offered to employees of a certain business. Once you cease being a member of that class, it might mean that your life insurance policy is subject to being canceled.
Read the fine print on your policy and figure out whether coverage will continue once you are no longer a member of the class. If not, then you need to make it a point to seek out alternate coverage before you cease being eligible for the life insurance policy you currently have.
Of course, there are other reasons that a life insurance policy could be subject to cancellation. Remember, a life insurance policy is a contract, and there are certain laws that apply to the interpretation and validity of contracts. Breaking the terms of the contract can lead to a denied life insurance claim.
It is a good idea to seek out legal advice on this issue. Many contract attorneys will review your policy and explain it for a very reasonable fee. Arm yourself with the knowledge you need in order to ensure that your policy remains in effect.