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U.S. cash value life insurance is a flexible and versatile financial tool,It has surpassed consumer insurance products that consumers can understand in the traditional sense.
To put it another way, whether you are buying insurance from the perspective of "critical illness" protection, or the need for "wealth inheritance",Subscribing to U.S. cash value life insurance is essentially buying "financial solutions" and "financial products."
But when applying for an insurance policy, policyholders are often not informed about all aspects of American life insurance.American Life Insurance GuideColumnist of ©️, co-founder of Hummingbird Life Heather, Shared with usAs consumers and investors, you should know 7 things about life insurance contracts that are usually overlooked.
#1: hesitation period clause
Since it is a financial product, what should I do if I find the wrong version after buying it?
All life insurance policies have a clause regarding the "Hesitation Period", Free Look Period. "Hesitation period", also known as "cooling-off period", gives policyholders the right to refund unconditionally after the policy is applied for.
The "hesitation period" of a policy is usually 30 days, which will be specified in the policy contract.If the content of the policy contract does not meet your expectations, you can carefully check and evaluate it during this time period.
#2: Non-contestable clause
There are some circumstances that did not tell the insurance company when applying for the policy. Now it needs to settle the claim, will the insurance company pay?
In every life insurance contract, there is an "incontestable clause", which is called Incontestability Clause in English.This clause usually specifies how many years later, the insurance company shall not refuse to settle the claim on the grounds of "failure to state the truth."
(Example of an insurance policy with non-defendable clauses)
The non-defense period is usually two years, and you need to inquire about the life insurance policy contracts of different companies.If the insurance company activates the irrefutable clause, the premium will be refunded.After the end of the non-defense period, the insurance company needs to settle the claim.
It is worth noting that there is a boundary between "failure to state the truth" and "fraud".If it is determined to be "fraud", the insurance company can refuse to settle the claim after the non-defense period ends.
(>>>Recommended reading:Is it difficult to settle American life insurance claims?What is the use of the "non-contestable clause" in the policy contract for me?)
#3: suicide clause
We often say that American life insurance claims even suicide.This is not strictly accurate.
Every life insurance policy contains a suicide clause, which states thatIf you commit suicide within the first two years of insurance, the insurance company will not settle the claim.If this situation is sent, the insurance company will generally refund the premium.
After two years, insurance companies usually make claims for suicide.Inquire about the suicide clause of the policy, the insurance company will list specific instructions.
#4: grace period clause
What should I do if I forget to pay the premium, or pay late?
Every life insurance policy contains a "grace period", a term called Grace Period in English.
If we forget to deposit the premium, or due to various reasons such as changing the bank, automatic deduction, etc., the "grace period" in the life insurance policy contract will indicate how many days the insurance company can accept the policyholder's delay in depositing the premium.Under normal circumstances, it is 31 days.
During these 31 days, the insurance company still provides the policyholder with benefits for claim settlement, and also waits for the policyholder to deposit late premiums at any time.
#5: How to pay the premium terms
The life insurance policy contract will specify the frequency and specific amount that the insured can deposit premiums.
In the premium clauses of life insurance, four methods of annual payment, semi-annual payment, quarterly payment, and monthly payment are usually provided.The lower the frequency of premium payments, the more money we will save.The cost of an annual policy is lower than that of a monthly policy.In the life insurance of the cash value type, such asIndex insurance, The annual premium payment model can significantly increase the potential for cash value accumulation.
(This Rider of life insurance is not the other Rider, click on the picture to understand)
#6: Life Insurance Additional Terms
Life insurance additional clauses, called "Rider" in English.
The various claim benefits of American life insurance are made up of different "additional terms"To achieve. For example, the commonMajor diseasesClaims,Long-term careAll claims are included in a life insurance policy contract by adding specific additional clauses.
OnLife Tank©️Before "What are life insurance additional clauses? What is Rider?"In this column, we gave a very detailed explanation.
Understand what basic additional clauses your life insurance policy contract contains, what additional benefits it provides, and whether the cost of these additional clauses is worth our purchase.
#7: The loan interest rate clause of the policy
As asset cash value life insurance, all provide terms for borrowing from the insurance policy.
Borrowing money from the insurance policy means borrowing money from yourself without reporting income, but such borrowing is not free.Life insurance companies will charge a loan interest rate to meet relevant tax regulations, making our behavior of borrowing money a "qualified and compliant" borrowing behavior.
Different borrowing methods have different borrowing interest rates.Under normal circumstances, the interest we pay for this is less than the dividends or interest accrued by the insurance company.
All insurance policies clearly specify the method of policy borrowing and the relevant terms of interest rate corresponding to different methods.Borrowing money from the policy will affect the long-term accumulation effect of the policy account.Excellent life insurance products provide competitive loan interest rate terms.
(>>>Recommended reading:What is the difference between borrowing money from a life insurance policy and borrowing money from a bank?）
Article summary
As with all financial products, it is important to understand what you are buying.For "Surrender waiting period"This is especially true for US dollar cash value life insurance, which is positioned as a "medium and long-term financial plan."
If after many years, we discover that we are not satisfied with the life insurance policy we purchased at the time, or we have not achieved our goals, then we may face a dilemma.If you reapply at this time, the premium will inevitably increase significantly.
"Learn more before buying"，"Learn Before You Buy"- LBYB is the basic principle of insurance policy advocated by the American Life Insurance Guide©️. As an insured person, you can also visit LifeTank©️’s "Policy evaluation"Column, learn about different insurance planning cases and insurance experience as a reference. (End of full text)
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About LifeTank©️ – LBYB
LBYB-Learn Before You Buy, is a guiding concept for individuals and families to configure life insurance proposed by TheLifeTank.com-American Life Insurance Guide©️.In view of the diversified financial instrument attributes of cash value life insurance in the United States, its application in the field of wealth accumulation and inheritance has surpassed consumer insurance products that consumers can understand in the traditional sense.The lack of corresponding basic knowledge education and one-sided education may cause harm to your rights and interests after many years.Before applying for an insurance policy, the American Life Insurance Guide©️ encourages consumers and investors to learn and understand the basic operating principles and functions of such financial products in advance, so as to obtain solutions that can truly protect their families and wealth.
