Life insurance can be one of the best financial tools you have even if it is low cost life insurance. It helps ensure you family’s financial future and can also give you some income under certain conditions, or when it reaches a certain term. It all depends on the clauses that are included in the low cost life insurance policy.
Know Your Policy
When you first purchase a life insurance policy it is important that you read through all the clauses as these will stipulate the amount, how and who receives your life insurance benefits.
When referring to beneficiary, this is the term that defines who receives the life insurance proceeds when you pass away.
This can be your children, relatives, or your spouse and this clause can be modified as needed throughout the years.
For instance, you may want to change the beneficiary if you first placed your parents as beneficiaries, but they then pass away, or you can also change it if you have placed your spouse as beneficiary and later you divorce.
This is why you should take your life insurance policy out once a year and go over it and make sure everything is in order.
Your insurance provider usually places a policy change clause in any low cost life insurance policy. This gives the provider the right to challenge the validity of the policy during the first two years that the policy is in place. This means they can void the policy if they find that you have concealed any pertinent information.
For instance, if you hid the fact that you were a smoker or a drinker, so that you could get a lower premium, and the provider encounters this then they may decide not to pay a claim if the death occurs within the first two years of the policy.
After this initial two year period passes, then the policy will be enforced and there cannot be a challenge to any of the clauses.