Canvassing Life Insurance: Effective Strategies For Success

Life insurance is an important part of long-term financial planning for you and your family. It is designed to pay money to chosen beneficiaries when the policyholder dies. There are two main types of life insurance: term insurance and permanent insurance. Term insurance covers the policyholder for a specific number of years and tends to have lower premiums, while permanent insurance provides long-term financial protection and includes both a death benefit and cash savings. When filing a life insurance claim, the beneficiary must contact the insurer, fill out the necessary forms, and provide the policy number and the policyholder's death certificate. The insurer will then verify the claim and pay the death benefit to the beneficiary.

Understanding the different types of life insurance policies

There are five main types of life insurance: term life insurance, whole life insurance, universal life insurance, variable life insurance, and final expense life insurance. Each type is designed to meet specific coverage needs. For example, term life insurance is ideal for those who only need coverage for a certain number of years, while whole life insurance is designed for those who need lifelong coverage.

Term Life Insurance

Term life insurance provides coverage for a specified period, ranging from one year to several decades or until the policyholder reaches a certain age. The premiums for term life insurance are typically lower than those for permanent insurance, but they increase as the policyholder ages. This type of insurance does not have a savings element or cash value, and if the policyholder outlives the term, no benefit is payable. However, term life insurance is generally more affordable than permanent life insurance.

Whole Life Insurance

Whole life insurance, a type of permanent life insurance, provides coverage for the policyholder's entire lifetime. It tends to be more expensive than term life insurance but guarantees a payout to beneficiaries regardless of when the insured passes away. Whole life insurance also includes a savings component, allowing a portion of the premium to accumulate cash value over time. This cash value can be accessed by the policyholder during their lifetime.

Universal Life Insurance

Universal life insurance is another type of permanent life insurance that offers coverage for the policyholder's entire life. It is sometimes called adjustable life insurance due to its flexibility. Policyholders can increase or decrease the death benefit and adjust or skip monthly premium payments within certain limits. Universal life insurance also includes a savings component that grows over time, allowing for borrowing against the accumulated cash value.

Variable Life Insurance

Variable life insurance is a riskier form of permanent life insurance. It consists of a fixed death benefit and a variable cash value that rises and falls based on the performance of selected investments. While variable life insurance offers the potential for greater benefits to beneficiaries, it also exposes them to higher risk, fees, and costs compared to other types of life insurance.

Final Expense Life Insurance

Final expense life insurance, also known as funeral or burial insurance, is a type of whole life insurance with a smaller and more affordable death benefit. It is designed to cover end-of-life expenses such as funeral costs, medical bills, and outstanding debt. Final expense life insurance is easier for older or less healthy individuals to qualify for and is often used to ensure that loved ones are not burdened with these expenses.

How to file a life insurance claim

To canvass for life insurance, it is important to understand the different types of policies available, their benefits, and what they cover. Life insurance policies are designed to pay money to "named beneficiaries" when the policyholder dies. These beneficiaries can be individuals or organizations chosen by the policyholder. When canvassing for life insurance, it is essential to consider the different types of policies, such as term life insurance and cash value life insurance, and the specific needs and preferences of the individual or organization.

Now, here is a detailed guide on how to file a life insurance claim:

Identify the Policyholder's Insurer:

The first step is to locate the policyholder's insurance company. The policy documents should contain this information, so it is essential to know where these documents are kept. If the policyholder is unable to provide this information, their financial advisor or estate planning attorney may be able to assist.

Obtain the Policyholder's Death Certificate:

The next step is to obtain multiple certified copies of the policyholder's death certificate. This can be done by contacting the relevant local government agency, such as the local vital records office. Having multiple copies is important, as you will need to provide one to the insurer and keep others for other institutions that may require them, such as banks or government bodies.

Contact the Insurer and Submit the Claim:

Once you have identified the insurer, contact them to initiate the claims process. They will guide you through their specific claim form, which can often be filled out online or in person. Along with the completed form, you will need to submit the policy number, which can be found on the policy documents, and the policyholder's death certificate. It is crucial to carefully review all the information before submission to avoid any delays in the process.

Choose the Payout Method:

Insurers typically offer several options for receiving the death benefit payout. These include:

• Lump sum: Receiving the full amount in one payment.
• Life income annuity: Receiving fixed, regular payments for life, calculated based on the beneficiary's life expectancy.
• Specific income annuity: Receiving payments over a fixed period, with the death benefit divided by the number of payments to determine the amount.
• Retained asset account: Keeping the death benefit in an interest-bearing savings account with the insurer and withdrawing as needed.

Receive the Death Benefit Payout:

After submitting the claim and choosing the payout method, the insurer will verify the claim and process it. Communicate with the insurer throughout this process to ensure a smooth transaction and address any delays. In many cases, the life insurance claims process can take 14 to 60 days from filing to the final payout.

It is important to note that the specific steps and requirements may vary depending on the insurance company and the type of policy. Additionally, there may be factors that can impact the length of the claims process, such as policy type, regulations, missing information, or cause of death.

How to choose the right life insurance coverage

Choosing the right life insurance coverage is an important decision, and there are several factors to consider when selecting a policy. Here are some guidelines to help you choose the right life insurance coverage:

Identify Your Needs

The first step is to assess your financial situation and determine why you need life insurance. Ask yourself the following questions:

• How much of the family income do I provide?
• Will these financial obligations change over time?
• How many years do you anticipate needing death benefits?
• Do I have existing policies or coverage through my workplace?
• What are my current and future financial goals, such as saving for retirement or a child's education?
• What expenses and debts do I need to cover, including medical costs, burial costs, and estate taxes?
• Do I have dependents or family members who rely on my financial support?

Understand the Different Types of Life Insurance

There are two main types of life insurance: term life insurance and permanent life insurance.

• Term life insurance provides coverage for a specific period, typically between 10 and 30 years, or until a particular debt is repaid. It is generally more affordable and suitable for those with temporary needs, such as covering mortgage payments or providing for young children.
• Permanent life insurance, on the other hand, offers lifelong coverage and includes a savings or investment component. It is more expensive but provides long-term financial protection and can be used for various purposes, such as paying premiums or borrowing funds.

Calculate the Amount of Coverage

When deciding on the amount of coverage, consider your income, financial obligations, and the number of years you need coverage. Multiply your annual income by the number of years you want coverage, adjusting for inflation and accounting for any additional expenses like college tuition or retirement funds.

Evaluate Your Budget

Determine how much you can afford to spend on life insurance premiums. Consider your monthly expenses and budget accordingly. If necessary, you may want to opt for a combination of permanent and term life insurance policies to balance your financial needs and budget constraints.

Consider Additional Benefits and Riders

Life insurance riders are add-ons that provide extra benefits to your policy. Some common riders include:

• Waiver of premium rider: Allows you to stop paying premiums if you become disabled or develop a covered illness.
• Accidental death benefit rider: Pays a higher benefit if death occurs due to an accident.
• Guaranteed insurability rider: Enables you to increase your death benefit in the future without a medical exam.
• Long-term care rider: Allows you to use a portion of the death benefit to pay for long-term care expenses.
• Accelerated death benefit: Allows you to access a portion of the death benefit if you are diagnosed with a terminal illness.

Compare Insurance Providers

When choosing an insurance company, consider their financial stability, customer satisfaction ratings, and the types of policies and riders they offer. Check independent ratings, customer reviews, and complaint indexes to assess their reliability and performance.

Seek Professional Guidance

If you're unsure about your options, consider consulting a trusted financial advisor or insurance agent. They can provide personalized guidance based on your unique circumstances and help you navigate the complexities of selecting the right life insurance coverage.

Remember, choosing the right life insurance coverage involves carefully assessing your financial situation, understanding the different types of policies, and seeking guidance when needed to make an informed decision.

How to use life insurance as a financial asset

Life insurance is often purchased with the primary goal of providing financial security for loved ones after one's death. However, some life insurance policies can also serve as valuable financial assets during your lifetime. Here are some ways to utilise life insurance as a financial asset:

Choose the Right Type of Life Insurance

Not all life insurance policies are created equal when it comes to their usefulness as a financial asset. Term life insurance, which is typically less expensive and covers a set period, does not offer the ability to build cash value. On the other hand, permanent life insurance policies, such as whole life insurance and universal life insurance, enable you to accumulate cash value over time, providing access to this value while you are alive.

Withdraw or Take a Loan on the Cash Value

One way to use your life insurance as a financial asset is to withdraw funds or take out a loan against the accumulated cash value. This can be useful for paying major expenses, such as college tuition or a down payment on a house. However, it is important to note that any outstanding loans against the policy will be deducted from the death benefit paid to your beneficiaries.

Use it as Collateral

In certain situations, your life insurance policy can be used as collateral when taking out a loan. This may improve your chances of loan approval or help you secure a better interest rate. However, if you pass away before repaying the loan, the outstanding amount will be deducted from the benefit paid to your beneficiaries.

Create Generational Wealth

Whole life insurance can be a valuable tool for creating generational wealth. By setting up an irrevocable life insurance trust (ILIT), the death benefit proceeds from your policy can pass to your heirs outside of your taxable estate. This helps your heirs cover estate taxes and preserve the wealth you leave behind.

Surrender the Policy

If you no longer need your life insurance policy, you have the option to surrender it and receive the accumulated cash value, minus any applicable fees and outstanding loan balances. However, doing so may create a taxable event, and you should carefully consider the implications of giving up the death benefit attached to your policy.

How to file an appeal if your life insurance claim is denied

If your life insurance claim has been denied, you do have the right to appeal the decision and there are several steps you can take to do so. Firstly, ask your insurer to explain the reason for the denial in writing. Review your policy to see if you should be covered and ask your medical provider to help you get answers from the insurer. Take notes on all discussions with the insurer and medical provider, including dates, names, and content. Keep copies of all medical bills, claims, and decisions.

Next, review your insurance plan benefits for information on how to appeal a claim denial. This information must be included in your insurance handbook and any denial letters. Start the appeal process with a written request that addresses the specific reason the claim was denied and the reasons why the decision should be reversed. If you can't find the information you need, contact your insurance provider's customer service department. If you have a self-insured plan, contact a third-party administrator (TPA) to ask about the appeal process.

Be sure to understand the reason for the denial of your claim. Common reasons for denial include pre-existing conditions, your medical provider not being part of the insurance network, surpassing the lifetime benefit cap, treatment not being FDA-approved, and treatment being determined as "not medically necessary". If you can prove medical necessity, this is likely to be the most effective way to overturn a claim denial. Work with your healthcare team to build the case for your appeal, including letters from your healthcare provider(s) stating why the treatment is medically necessary and including copies of journal articles about medical research studies that show the success of that type of treatment.

There are several levels in the appeal process. First, you must appeal to the insurer, filling out an Appeal Filing Form and writing an appeal letter. Keep your appeal letter concise and to the point, and use bullet points to make it easy to read. Send the appeal letter with your documentation, including letters from your healthcare team, via fax and certified mail.

If your first appeal is denied, you may need to request a second-level review by the insurer, this time including more documentation, especially research studies about this type of treatment or service. If this second appeal is also denied, you can request a third-level appeal to an outside organization, known as an independent review organization (IRO). This reviewer might be a doctor or another clinician who is board-certified and licensed in the same or similar specialty as your treatment. Send the IRO a copy of all the documentation you sent to your insurer, as well as any new documentation, via fax and certified mail.

Note that you must send in your appeal within the timelines set by your healthcare plan and your state. If your care is urgent and you need a faster decision, you can request an external review even if you haven't completed all of the health plan's internal appeals processes.

Frequently asked questions