Purchasing life insurance is one of the most important financial decisions you’ll make. But if you’re not familiar with the features of your plan, you may not be getting the most out of your premium dollars.
Here are 10 of the most commonly overlooked features of life insurance plans and why they’re important to you:
- Waiver of premium. This feature pays the premium of a policy if you become seriously ill or disabled.
- Accelerated death benefit. This feature allows you to receive cash advances against the death benefit of your policy if you’re diagnosed with a terminal illness. Many people with this benefit use the money to help pay for treatment and other expenses when they have only a short time to live.
- Guaranteed purchase option. With this feature, you can purchase coverage at designated future dates or life events without proving you’re in good health.
- Long-term care riders. Some life products include this option, which allows you to use the benefits of your policy to pay for long-term care in exchange for a reduced life benefit.
- Spouse or child term riders. Life policies with this feature allow you to purchase term life insurance for your spouse or dependent child, up to age 26. This option can be a more affordable way to purchase coverage if you can’t afford separate policies.
- Cash value plans. This type of policy pays out upon your death and also accumulates value during your lifetime. You can use the cash value as a tax-sheltered investment, as a fund from which you can borrow and use to pay the policy premiums later.
- Mortgage protection. This feature, typically found on term life policies, will pay your mortgage if you die.
- Cash withdrawals and loans. Many universal and whole life policies allow you to withdraw or borrow money, using the cash value of the policy as collateral. Interest rates tend to be relatively low. You can also use the cash value of your life policy to pay your premiums if you need or want to stop paying premiums for a period of time. You must pay back the loan or your beneficiaries will receive a reduced death benefit.
- Survivor support services. Some life policies offer services that provide objective financial and legal assistance to beneficiaries.
- Employee assistance programs. This feature makes resources available to you for problems that can affect your personal and professional life. Resources are usually free and help address issues such as substance abuse, stress, marital problems, legal concerns and major life events.
Get familiar with your life insurance policy so you don’t overlook important features that could be critical to your livelihood. Make sure you have a copy of your policy, you know where it’s kept and someone else in the family also knows where it’s stored. You can always request a copy of your policy from your insurance company if you need it. And remember to evaluate your insurance coverage from time to time to make sure it’s appropriate for your stage in life.
About the Author
Judy Bezler is an Independent Representative for Colonial Life and is responsible for marketing Colonial Life’s products and services throughout the Carolinas.
Colonial Life & Accident Insurance Company is a market leader in providing financial protection benefits through the workplace, including disability, life, accident, dental, cancer, critical illness and hospital confinement indemnity insurance. The company’s benefit services and education, innovative enrollment technology and personal service support more than 80,000 businesses and organizations, representing more than 3 million of America’s workers and their families.
For more information call Judy Bezler at 704-559-9323, visit www.coloniallife.com or connect with the company at www.facebook.com/coloniallifebenefits, www.twitter.com/coloniallife and www.linkedin.com/company/colonial-life.