Important Facts

4 Mistakes That Could Derail Your Life Insurance Claim

Ensuring your beneficiary can easily file a life insurance claim after your passing is important to you. But did you know that some common mistakes can put that at risk? Here are a few mistakes to avoid.

Avoid Derailing Your Life Insurance Claim

4 common mistakes

Life insurance provides you with the peace of mind of knowing that the people who depend on you for financial support will be taken care of after you're gone. That's why no matter what type of life insurance policy you have, you want to be certain the death claim can be paid as soon as possible and the funds are put in the hands of your beneficiaries.

Unfortunately, many people put this at risk by making these four common mistakes:

Letting your policy lapse.

Depending on the type of life insurance you have, you could be paying your premiums for several decades to come. For this reason, you need to factor in the cost of your policy into your budget to avoid missing payments and risking a policy cancellation. Better yet, have your premiums automatically deducted from your checking or savings account every month. While insurers may allow a type of grace period if you are late paying your premium, going too far beyond your due date can put your coverage at risk for cancellation.

Inaccurate application information.

Providing inaccurate information or withholding important information on your life insurance application puts your beneficiaries at risk by way of material misrepresentation. If the insurance company were to find evidence that the information on your application was fraudulently misrepresented, your policy may be cancelled, leaving you with no coverage. Or you could die and when your beneficiary files the claim, it could be denied.

Leaving a large policy loan balance.

Many types of permanent life insurance allow policyholders to borrow against their policies by way of a policy loan. However, borrowing too much from your policy and not paying it back will reduce the amount of your death benefit, leaving your beneficiaries with less than you may have intended. If you do borrow from your life insurance policy, it is important to weigh the risks it poses to your beneficiaries.

Making your estate your beneficiary.

If you die and your estate is the named beneficiary of your life insurance policy, the proceeds of your death benefit could get used up by things such as estate taxes, probate costs, and any outstanding debts you may have at the time of your death. This could potentially leave the people you love with little or even nothing. For estate planning purposes, it's generally best to name an actual person or persons who can manage and direct how the proceeds of your policy are to be allocated. If you have questions about setting up your estate plan to suit your individual needs, be sure to speak with a qualified attorney or trusted financial advisor.

Understanding how your life insurance policy works is very important. Don't put your loved ones at risk in the event they need to file a life insurance claim. If you have questions or need additional information, speak with your agent or company representative.

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Life Insurance Claim

No matter what type of life insurance policy you have, you want to be certain that in the event of your death, the people you love will have the financial resources they need. Don't make these four common mistakes that could put your beneficiaries at risk! For more information, visit the Protective Life Learning Center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

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