Do you have a life insurance policy that you have had for a couple of years or longer? You should read this before cancelling that policy, just to save some money with a replacement policy. Are you wondering what information I could tell you that could be so important that it may save you all kinds of money and possibly keep you from losing your life insurance?
I'm sure if you have a life insurance policy and are looking to purchase a replacement policy to save some money than you have already heard that life insurance rates are cheaper now than they have been in years. This is always a good thing when it comes to saving money but there is something you should make sure you do to keep from screwing-up the life insurance policy that you currently have.
Have you ever heard of the two year contestability clause? What is that? Well I am going to tell you; and you should read the policy you currently have to see if you have passed the contestability period. If you have already passed the contestability period, you may just want to add another life insurance policy to your portfolio instead of cancelling the one you already have.
When you buy a life insurance policy, the insurance company does their due diligence to make sure that you have told them the truth on the application. This is not news to anybody, but did you know that if they missed something or if you happened to forget to tell them something they have two years in which they can decline your policy if they find it. That is right … two years!
For example, Lets say that you are a smoker but you apply for a life insurance policy as a non-smoker so your rates would be cheaper. Even though the insurance companies try to verify all the information on the application lets say that they miss the smoking information.
Congratulations, you've just saved all that money; but what happens if you would happen to die of lung cancer within the first two years? Most likely the insurance company will investigate your smoking history a little better. If they would happen to find proof that you were a smoker than they would most likely not pay the death benefit to your beneficiary. They would probably just return the money that you had paid for the policy and you would have accomplished nothing but letting your loved ones down.