Certain words signal trouble ahead when they apply to your life insurance policies. Here are some of the worst words that can be connected to your coverage -- and what you can do about it.
If you apply for life insurance and are declined, it will likely be even tougher to get approved in the future. "It is a red flag," says Ernie Rongish, an actuary and vice president of life and annuity product performance at Mutual of Omaha. "We would want to know the circumstances around that." Curt Lundquist, a life insurance manager at Allstate, calls a decline "a pretty serious result" and one that is likely to be repeated. Rongish says that once you are turned down for a policy, life insurance companies that later approve your application may rate you as "substandard" and charge you a higher premium. Still, there is hope, says Marvin Feldman, president and CEO of the nonprofit Life and Health Insurance Foundation for Education (LIFE) in Arlington, Va. "A declination doesn't mean a declination from all companies. Every company underwrites differently." For example, Feldman says one carrier may charge an applicant with heart disease more than others would. He recommends seeking help from an insurance agent or impaired-risk specialist who can help guide you toward insurance companies more likely to approve your application. "They know where to go and what questions to ask," he says.
Failing to pay your life insurance premiums on time could lead to a lapse in coverage. And once your coverage lapses, it may be difficult to reinstate the policy. Typically, a life insurance company gives customers a grace period of 30 or 31 days after a due date has been missed before a policy will lapse, Feldman says. So if you're a couple of weeks late on a payment, check the details of your policy's grace period and get that payment in ASAP.