November 13, 2007
By Aaron C. Pinkston
Surprise Life Insurance
What type of insurance is Surprise Life Insurance? It’s when you have life insurance but you don’t know enough about it.
Something I commonly hear is ‘I’ve had this life insurance policy for a long time. I’m sure it’s fine.’ In fact what usually happens is that after a period of a few years, we become complacent with our insurance protection, don’t review it, and assume it’s on track. Assuming its on track may be a weakness.
I recently had the onerous job of informing a client of our firm that his life insurance might go away in 12 years. It most likely would go away within 24 years. He has been paying just over $100 month on this policy since he originally bought it in 1995 from a well rated and well respected carrier.
At the time that he bought it, he thought he would be able to stop making payments by now and let the coverage continue. He was disturbed that this was not the case. In fact, even if he continued to make his payments on time as he has done so far, his policy would lapse between his age 72 and 84.
Being the humorous fellow that he is, he quipped, “That’s right when I plan on dying!”
With permanent life insurance, you generally plan on dying before the policy goes away. Instead of stopping his premiums and being comfortable that his policy would continue to cover him, he finds out that his policy will likely disappear before he dies even if he keeps up with his planned premiums – that’s Surprise Life Insurance.
The lesson we all need to take from this is to take the time every year, or even every other year, to dust off those important documents. By ordering an inforce illustration and reviewing it with a competent insurance professional, you may uncover a discrepancy between where you are and where you thought you were. Generally speaking, the earlier you discover these differences, the less expensive it will be to fix.
You may even discover that things have changed in your own life. Sometimes it’s hard to see where we have been and where we are going until we take some time to slow down and think about it. With many of life’s changes reviewing your coverage is a wise thing to do.
In the case of this gentleman, he was able to move to a more predictable type of policy that still let him reduce his premiums. Everyone’s situation is different and you may need to enlist the help of a financial planner or insurance professional to answer your questions and help you explore options. You need to find someone who knows their stuff, but ultimately a willingness to listen and to put your concerns before theirs is more important.
Aaron C. Pinkston
Director of Insurance
Council Financial
http://www.councilfinancial.com
51 Kilmayne Dr.
Suite 304
Cary, NC 27511
919-467-5772 (p)
919-467-5765 (f))
