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Important answers to important questions
Here are some questions and my answers to important questions about your current life insurance.
1. Can I change my annual premium payment to monthly or quarterly without hurting my policy?
Yes, contact your insurance company by phone immediately and ask for a change of premium form. Ask them to email it to you, email can be immediate to 3 days, traditional mail can be one to two weeks. Also ask for the exact premium payment for the mode you want to pay. Annual is cheapest, then monthly systematic, with semi-annual being next cheapest, and lastly, the quarterly payment option.
2. How will this financial crisis impact the rate of return of my cash value policy in the future?
This question is more difficult to answer but it will have a huge impact. Below is a quick summary of life insurance policy chassis and how they may be impacted.
Term Insurance
Protect it. Keep track of your premium date, insurance companies are not required by law to send you a bill or reminder notice. It is your responsibility to keep track of your financial obligations. You have a 30 day-grace period and then your policy will lapse. Insurance companies reserve the right to reinstate you subject to medical underwriting. If you are not as healthy, protect your policy from lapse.
Whole Life, Universal Life, Index Life, Variable Universal Life
These types of policies are called cash value or permanent policies. FYI: The day they run out of cash; they are no longer permanent. Whole life cash value grows from annually declared company dividends, Universal life grows from annually declared company declared interest rate, Index life grows from a complex formula outlined in your presentation and Variable Universal Life increases or decreases based on the performance of your investment allocated portfolio.
We are in a low interest rate environment, a multi trillion-dollar bailout, thousands of people unexpectedly dying and a stock market meltdown which may devastate variable life insurance policies that have not been properly funded and managed. This is the time to protect what you have.
In my next report, I will discuss how this economic meltdown will have a negative impact on each one of these policies. You are older now, your health may not be as good as when you got your policy, you may have not funded it properly or you may have outstanding loans now.
