“Lapse” of modern life insurance – what does Lapse mean? Experts conducted a panel discussion on this. We use specific research data, comparison of insurance premium cases, and the popular metaphor at the end of the article to help policyholders understand the relationship between “insurance termination” and “risk”. The following is the main text.
What does it mean to “cut off” a life insurance policy?
“Cutting Insurance”, the English name is Lapse, which means the end of the life insurance contract.
What are the disadvantages of “cutting out insurance” to policyholders?
After the expiration of the life insurance policy contract, the policyholder will lose the claims benefits originally promised by the policy. The insured will not pay penalties or incur related costs due to the termination of insurance.
Which situations will “cut off insurance”?
There are many subjective reasons for canceling insurance, such as forgetting to deposit premiums, or taking too much money from the insurance account, or choosing a design plan for canceling insurance at a specified age, etc.
Objectively speaking, all insurance protection is supported by “money”.
Therefore, if there is no “money” to pay the premium, or if the “money” in the insurance account is not enough, the insurance will be cut off.
When the policyholder misses a payment and your life insurance contract is at risk of lapse, the insurance company is required by law to notify you and send an email explaining the situation.
The Actual Situation of American Life Insurance “Closure”
There is usually a 30-day grace period (some insurance companies have a grace period of 60 or 90 days) before the policy is officially terminated. Once the grace period has passed, the policy contract will officially become invalid—that is, “insurance cut off”—and the insurance company must also contact you to remind you according to the law.
In a life insurance contract, there is usually a recovery clause (Reinstatement). After the insurance is terminated, the policyholder can request the insurance company to restore the policy according to the terms and conditions.
According to research data, the average policy termination rate of American life insurance companies is 4%.
“Actively cut off insurance”, from talking about it to creating value
In the actual wealth inheritance insurance market, through the deliberate exaggeration of a few salespersons, the policyholders have a feeling of turning pale when talking about the word “insurance”.
In this column, I will not defend it.
In the above, I pointed out that “cutting insurance” is one of the many risks that we need to manage through insurance contracts. Next, I will point out with specific data from a professional point of view that reasonable management of the risk of “cutting insurance” can create greater value for us.
lapse-insurance-premium
In the graph above, I show a comparison of the annual premiums for the same policyholder: it is the cheapest to insure until the age of 80, and the most expensive to insure until the age of 105-I use this graph to illustrate that the longer the guaranteed claim time of the insurance, the more we bear The lower the risk, the more expensive the premium will be.
Policyholders can customize their own protection-type insurance policies through active management of “cutting insurance” and combining family budgets and family members’ health and longevity.
The advantage of doing this is that it not only helps us avoid the risk of loss of insurance, but also effectively reduces the cost of insurance premiums.
For extremely conservative policyholders, they can also choose to pay more premium prices and buy out from the insurance company until they are 120 years old, or even 125 years old.
Column Summary
The relationship between policyholders and “insurance risk” is very similar to the attitudes of Eastern and Western countries towards the new crown virus.
Are you willing to pay a higher cost to “clear the risk” and completely eliminate the new crown virus; or choose to take a certain risk and accept the new social order brought about by the coexistence of the risk of the new crown virus?
This is a personal value choice, and others should not judge it arbitrarily.
But from the perspective of modern people, managing and handling this relationship in a professional way can indeed bring tangible benefits to every policyholder. (full text)
