Life insurance can provide a valuable investment and/or a vital form of financial security in the event of the premature passing of a family breadwinner. While life insurance can provide a substantial benefit, many policyholders and beneficiaries find that their claim is denied despite the insured fulfilling the duty to make premium payments for years. As an experienced Miami life insurance claims attorney, I have provided an overview of some common mistakes that undercut the benefits provided by a life insurance policy.
Allowing Excessive Delay in Obtaining Coverage
Although life insurance coverage tends to be a matter about which people frequently procrastinate, the decision to postpone purchasing a policy can leave your family financially vulnerable if something unanticipated befalls you. Because term life insurance premiums tend to rise when you are older, the best option is to purchase a policy as early as possible so you can save money. As you age, your risk of illness or serious medical conditions increases, so the cost of purchasing life insurance will become more expensive, or you might become ineligible to purchase a life insurance policy. This is especially true if you develop a serious medical condition. While some people consider it prudent to wait until they are free of debt to purchase a policy, this is when a family is the most vulnerable. Higher levels of savings and less debt reduce the need for life insurance.
Purchasing an Excessive Number of Unnecessary Riders
Many policyholders make the mistake of purchasing life insurance riders that increase their premium and the commission that they pay agents but provide little in actual value to the policyholder. Examples of frequently purchased riders include waiver of premium, accidental death, income replacement and critical illness. Although these riders often have emotional appeal, they might provide minimal benefit depending on your situation.
Securing Insufficient Coverage to Replace Income
Many experts recommend that you purchase between 10-12 times your anticipated earnings during your expected lifespan in coverage. The nominal amount of life insurance coverage provided by many employers is not nearly sufficient. This type of policy often offers no more than one year worth of income. If you are the primary earner in the family, your spouse and children will need enough coverage to preserve their standard of living for many years. If you purchase adequate coverage, the insurance proceeds can be invested, so your beneficiaries earn an adequate return to replace your income and provide needed financial security. Coverage should be obtained by both spouses, even a stay-at-home parent. The time the stay-at-home parent devotes to taking care of the family home and children has a significant monetary value because it enables the breadwinner to work outside the home. The cost of round the clock child care, a full-time cook, housekeeper and providers of other household services can be staggering to replace.
Purchasing a Policy for Too Short a Term
If you decide to minimize the cost of your purchase by selecting only a 15 year policy, you could have medical issues that affect you when it is time to purchase a new policy. The cost to purchase the next plan would increase substantially. If the medical problems are serious enough, you might not even be able to purchase another policy. While the decision about the appropriate duration of the term of a policy is an individual decision, some experts suggest a term that is commensurate with the time your kids will be living on their own.
If you have questions about life insurance claims, you are invited to contact our law firm to speak to an experienced Miami insurance claims attorney. My law firm specializes in representing policyholders in claims disputes in Miami and throughout Florida. Click here to read about some of our case results. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.