Posted by Modern Life Insurance's "Breakout" - What Does Lapse Mean?The Life Tank©️Editor and Financial Advisor for American Life InsuranceHeather Xiong CFP®️There was a panel discussion on this.We use specific research data, premium case comparisons, and the popular metaphor at the end of the article to help policyholders understand the relationship between "guarantee break" and "risk". The following is the content of the main text.
What does life insurance "break" mean?
"Breakout", English name is Lapse, which means that the life insurance contract expires and ends.
What are the disadvantages of "breaking insurance" to the policyholder?
After the expiration of the life insurance policy contract,The policyholder will lose the claims benefits originally promised in the policy.The policyholder will not pay penalties or incur related expenses for the termination of the policy.
In what situations will a "guarantee break" occur?
out of warrantySubjective reasonsThere are many kinds, such as forgetting to deposit the premium, or taking too much money from the insurance account, or choosing an age-specific insurance plan, etc.
objectively speaking, All insurance protection is supported by "money".
therefore,If the "money" is not paid for the premium,Or,Not enough "money" in the insurance account, the warranty will be terminated.
When the policyholder misses a payment and your life insurance contract is at risk of lapse,Insurance companies are required by law to notify you, send the mail to explain the situation.
The actual situation of American life insurance "breakdown"
There is usually a 30-day grace period (some insurers have a grace period of 60 or 90 days) before the policy is officially terminated.Once the grace period has passed and the policy contract has officially expired - that is, "break the policy" - the insurance company must also contact you to remind you in accordance with the law.
In a life insurance contract,Usually there is a Reinstatement.After the insurance is terminated, the insured can apply to the insurance company to restore the insurance policy in accordance with the terms and conditions.
according toAmerican Life Insurance Guide®️'s research data pointed out that,The average U.S. life insurance policy has a 4% discontinuation rate.
"Proactively break the guarantee", from talking about tigers to creating value
In the actual wealth inheritance insurance market, after the deliberate exaggeration of a few sales staff, the insured's mind has a feeling of disillusionment with the word "broken insurance".
In this column, I'm not going to defend it.
In the above, I pointed out that the "break of insurance" is one of the many risks that we need to manage through insurance contracts.Next, I will point out with specific data from a professional point of view that reasonable management of the risk of "broken guarantee" can create greater value for us.
In the picture above, I show the comparison of the annual premiums of the same policyholder: the cheapest insurance until the age of 80, the most expensive until the age of 105 - I use this picture to illustrate,The longer the insurance guarantee claims, the less risk we take and the more expensive the premium will be.
Policyholders can customize their own insurance policies through active management of "guarantee interruptions", combined with family budgets and the health and longevity of family members.
The advantage of doing this is that it not only helps us avoid the risk of insurance interruption, but also effectively reduces the cost of premiums.
For extremely conservative policyholders, they can also choose to pay more premium prices and buy out from insurance companies until the age of 120 or even 125.
Column summary
The relationship between the insured and the "risk of insurance break", and the treatment of Eastern and Western countriesNew crown virusattitude is very similar.
Are you willing to pay a higher cost to "zero risk" and completely eliminate itNew crown virus; or choose to take certain risks, accept andcoronavirus riskA new social order brought about by coexistence?
This is a personal value choice, and others should not judge it rashly.
But from a modern point of view, managing and handling this relationship in a professional manner can indeed bring real benefits to every policyholder. (End of full text)
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