insurance

Cutting Costs

Everyone would like to cut insurance costs without cutting out the policy. But is this possible to do? Yes, it is. And some respected insurance men say that this is really what you ought to do—in some cases.

These men advise the public to keep their whole life insurance policy six or seven years until the cash values are substantial. Then they advise lapsing the policy without taking out the money. By law, extended term insurance will keep one covered for as many years as specified in the table printed in one’s whole life policy. You will recall the case of the New York widow who collected $6,000 on the death of her husband from his lapsed policy.

Extended term insurance can run for many years if one’s policy is seven years old or older. A person with terminal illness, for example, could utilize this suggestion to help pay medical bills with saved premiums. But there are also other ways to cut insurance costs.

Is a person’s policy rated? For example, if he has been paying a penalty for being overweight and he has been normal weight for a year or more, he can ask to have the rating removed. This applies to any rated physical condition or handicap that has been corrected. It is worth a try.

Another way to cut insurance costs is to request a “reduced paid-up policy.” Under the table of cash values, one’s policy will show how large a paid-up policy one is presently entitled to. Of course, it will not equal the face amount of the contract. That is why it is called “reduced” paid up.

If you are shopping for life insurance, first estimate your family Social Security benefits should you die. They could equal many thousands of insurance dollars. Then look around for inexpensive group coverage. Try your employer or trade union. Postal workers, teachers, nurses, lawyers, electrical engineers, for example, can buy excellent group coverage at reduced rates.

For those living in New York, Connecticut or Massachusetts the answer may be savings-bank life insurance. This costs less because one is not paying for the services of a licensed insurance agent.

Once a person gets the kind of life insurance that he wants, he should form the good habit of paying premiums within the thirty-one-day grace period. If he is late and the policy lapses, the company is obliged to reinstate it up to three years after it has lapsed, but only if he proves to be in good health.

Another disadvantage in letting a policy lapse is that each reinstatement turns the clock back to the start of the two-year contestable period. After holding a policy for two years, it becomes incontestable. However, prior to the termination of the two-year period, any important omission uncovered as a result of a claim could void the contract. So, for such reasons, it is important not to let a policy lapse.

Life insurance should be treated as valuable property similar to a savings account, stocks or bonds. It takes some of the economic sting out of death. It can serve a useful role.