Did you know: The dollar amount of death benefit payouts that seniors forfeit annually through lapsed, or surrendered life insurance policies is $112 billion! (2015). This is more than the net worth of either Mark Zuckerberg (Facebook) or Jeff Bezos (Amazon)!
That is $112 billion worth of cash value down the drain. These could have been death benefits, inheritance, or donations to charities. This is $112 billion that insurance companies get to retain. All because policyholders surrendered their policies or allowed them to lapse.
Why do policies Lapse?
A life insurance policy lapses when a premium isn’t paid. This results in all benefits of the policy being lost!
However, there is a brief grace period during which a premium payment for the life insurance policy can be made.
Can a Lapsed policy be recovered?
Yes, there are a few circumstances in which the life insurance policy can be recovered.
- It could be as simple as resuming premium payments.
- It could involve a lengthy process that includes a new medical exam, repaying all premium payments from the lapsed period,
- It might require the services of an attorney.
How to avoid a Lapsed policy
In short, pay your premiums.
Most insurance companies can automatically withdraw the monthly payment from a bank account.
Some companies may take missed premium payments out of the policy’s cash value. Note: term life insurance has no cash value.
If you’re in danger of a lapse, contact me today. Together we can review your financial strategy to help you and your loved ones stay covered.