Life Insurance Comparison: Weighing The Pros and Cons of Each Type of Plan

When we think about our future plans, we rarely ever consider the possibility of our untimely deaths. After all, we’d rather not ruin our day by bothering ourselves with uncomfortable thoughts. However, we don’t know what’s waiting around the corner, so it’s smart and practical to ensure that you always have life insurance coverage.

Picking up where we left off last week, we’ll be listing five more important benefits and features that may or may not come with the different types of life insurance plans. We’ll be using these to characterize and compare one plan from another as we go through each type one-by-one starting next week.

Living Benefits

One of the most common misconceptions about life insurance is that benefits can only be availed once the insured is no longer around. This is not always the case since some types of plans come with living benefits.

There are different kinds of living benefits depending on the type of plan you have and your insurer. For example, whole life insurance plans build cash value, which you can use as extra income. Term insurance, on the other hand, might provide you with accelerated death benefits, which lets you enjoy an early payout if you contract terminal illness.

We’ll be discussing all of these in detail when we move on to the specific types of plans. For the meantime, what you should know is that there are additional benefits to life insurance that don’t involve death.

Hospital Confinement Benefit

Another benefit that’s worth having is hospital confinement. While this may already be included in your individual or group health plan, the hospital confinement benefit of your life insurance can serve as income replacement in case of emergencies that put you out of action.

If you’re not able to work, you don’t get a salary. And without a salary, how do you expect to pay for your needs and take care of your family? Having income replacement takes care of all those worries, allowing you to rest and focus on your recovery.

Non-forfeiture Option

In case you’re not able to pay your premiums within the grace period, your plan will lapse. But don’t fret just yet, there are different options and clauses for how you can still avail of your benefits and hold on to your plan if ever this happens.

Whole life insurance, for instance, has a non-forfeiture option, which essentially lets you, the insured, receive full or partial benefits or a partial refund of premiums after a lapse due to non-payment.

There’s also a premium advance loan, where you give the provider permission to get the cash value of your plan to pay for your missed premiums. Payment comes with interest but you hold on to your coverage one-hundred percent.

These are just a couple of the examples that you can choose when you first apply for your plan. Of course, we don’t recommend that you miss your payments. But in the event that your plan does lapse one day – whatever the reason may be – at least you know about there are these options to help you keep your coverage.

Contestability Period

The contestability period in life insurance describes the period of time when insurers can review your application and conduct investigations regarding your death. And, if they find any evidence of fraud or foul play, they can refuse the claim.

For almost all life insurance plans in the country, the contestability period is two years. This means that after two years of your plan taking effect, your insurer can no longer cite inconsistencies in your application to deny your family’s claim.

Reinstatement Period

Lastly, reinstatement period is the period of time it takes to resume your coverage after it lapses. This happens when you fail to pay after your grace period. During this time, your beneficiaries won’t be able to make a claim in case you die.

Reinstatement period is usually 30 days for life insurance plans. Insurers may also require you to present an updated medical exam and the full payment of your outstanding premiums before you get your coverage back.

This rounds out our list of benefits and features, and we can finally move on to tackling the different types of life insurance plans that you can avail of. Be sure to check back again for the next entry in this ongoing series.