Contracting With Foresters: A Guide To Their Life Insurance

Life insurance is a crucial financial safety net for your loved ones, providing financial support and easing their burden in the event of your passing. When considering life insurance, it's essential to understand the different types of policies available, such as term life and permanent life insurance, including whole life and universal life insurance. These policies offer varying levels of flexibility, coverage periods, and premium structures. By choosing a policy that aligns with your short-term and long-term financial goals, you can ensure that your loved ones are taken care of, helping them stay in the family home, replacing lost income, and paying off debts and final expenses. Life insurance can also play a role in legacy planning, business operations, and supplementing retirement income. It's important to note that the cost of life insurance depends on various factors, including age, health, and the type of policy chosen.

Understanding the contract

Offer and Acceptance

The process begins when you submit a proposal form to the insurance company, detailing the requested coverage and providing relevant information. The insurance company then reviews your application and decides whether to accept and provide the coverage. In some cases, they may offer insurance with modified terms.

Consideration

Consideration refers to the premiums you pay to the insurance company and, in the event of a claim, the money paid out to you by the insurer. This ensures that both parties contribute value to the contract.

Legal Capacity

To enter into an insurance contract, you must be legally competent. For example, minors or individuals with mental illnesses may not be qualified to sign such contracts. Similarly, the insurance company must be licensed under the relevant regulations to be considered competent.

Legal Purpose

The purpose of the contract must be lawful. If the insurance contract encourages or supports illegal activities, it is invalid.

Declarations Page

The declarations page is typically the first page of your life insurance contract. It includes essential details such as the policy owner's name, policy type and number, issue and effective dates, premium class or rate, and any additional riders or add-ons you've selected.

Policy Terms and Definitions

Your life insurance contract should include a section that defines key terms used in the policy. This section will help you understand words and phrases such as "death benefit," "premium," "beneficiary," and "insurance age."

Coverage Details

This section provides comprehensive information about your policy, including the premium amounts and payment schedule, penalties for missed payments, and the designated beneficiaries who will receive the death benefits.

Additional Policy Details

If you've chosen to add any riders to your policy, there may be a separate section outlining these add-ons. Riders enhance your coverage by providing additional benefits, such as accelerated death benefits, long-term care coverage, or critical illness coverage.

Understanding the Fine Print

It is essential to carefully review the entire contract, including the fine print, before signing. Pay close attention to the details and don't hesitate to consult an insurance expert or advisor if you have any questions or concerns about the terms and conditions.

Choosing the right product

Choosing the right life insurance product depends on your unique needs and budget. Here are some factors to consider when selecting a life insurance product:

Type of Coverage

Life insurance can be broadly categorized into two types: term life insurance and permanent life insurance. Term life insurance provides coverage for a fixed period, typically between 10 and 30 years, and is more affordable. On the other hand, permanent life insurance offers lifelong coverage and often includes a cash value component that can be borrowed against or withdrawn. Permanent life insurance is more expensive but provides coverage for a longer duration.

Amount of Coverage

Determine how much coverage you need by considering your income, financial obligations, and the future needs of your dependents. Calculate the income you generate for your dependents, including workplace benefits and any services you provide that would need to be replaced. Multiply this amount by the number of years you need coverage, adjusting for inflation and subtracting any expected Social Security benefits. You may also want to add funds for your children's education or your spouse's retirement.

Cost of Coverage

Evaluate your budget to determine how much you can afford to spend on life insurance premiums each month. If you require permanent life insurance coverage but have a limited budget, consider supplementing it with a term policy to get the desired death benefit at a lower cost.

Riders and Additional Benefits

Life insurance riders are add-ons that provide additional benefits to your policy. Some common riders include accelerated death benefit riders, long-term care riders, and critical illness riders. These riders may allow you to access a portion of the death benefit while you're still alive to cover expenses related to a terminal illness or long-term care. Consider which riders are important to you and compare their costs across different companies, as some may be included at no extra charge.

Financial Strength of the Insurer

It is crucial to choose a financially stable insurer with a strong reputation and high customer satisfaction ratings. Check the financial strength ratings of the insurance company from independent rating agencies like AM Best. Additionally, review customer complaints and satisfaction ratings from organizations like the National Association of Insurance Commissioners (NAIC) and J.D. Power.

Application Process and Requirements

Consider the application process and requirements of the life insurance policy. Some companies offer same-day issue policies without a medical exam, especially for term and final expense policies. However, if you are in good health, undergoing a medical exam may result in more favorable rates. Compare the requirements and underwriting process of different insurers to find the one that best suits your needs and circumstances.

Vesting of commissions

For captive insurance agents, the commission rate may be negotiable when starting at an agency, and there might be opportunities to increase the rate over time. The commission is typically paid out to the agent's agency by the carriers, and the agency then takes their cut before paying the agent the agreed-upon rate. As captive agents spend more time with the agency, their commission rate on first-year policies tends to increase.

Regarding residual commissions, which are paid in years two, four, seven, and so on, some agencies may stipulate that agents must be with the agency for a specified period before receiving these payments. The ability to own one's book of business and collect all commissions, including residuals, indicates that an agent is fully vested. Generally, the longer it takes for an agent to earn the full commission, the longer the vesting period will be.

Independent insurance agents may encounter different vesting dynamics. Some agencies allow independent agents to be paid directly by the carriers, including immediate residual commission payments. In such cases, the agent's upline only receives an override paid by the carriers, and the agent is considered vested immediately, retaining ownership of their book of business and clients.

It is important to carefully review agency agreements, as they may contain stipulations regarding client ownership and portability if an agent leaves the agency. Captive agents, in particular, should be cautious, as their clients are often considered the proprietary property of the agency, and there may be restrictions on working with those clients if the agent departs.

Making a claim

Step 1: Contact Foresters

First, you will need to contact Foresters to inform them of the death of your loved one and initiate the claims process. You can do this by calling their toll-free claims number at 1-800-828-1540. Their hours of operation are 9 a.m. to 6 p.m. ET, Monday to Friday.

Step 2: Provide Initial Information

When you call, a Claims Administrator will ask you for some initial information to get the claim started. This includes:

• The name of the deceased.
• Contact information for the person who will be handling the claim process.
• The date of death of the decedent.
• The cause and manner of death, if available.

Step 3: Complete the Claims Form

Foresters will then send you the appropriate claim form via email or regular mail within two business days of the initial notification of death. You can also download the claim form from their website. It is important to complete the form in full to ensure a smooth review process.

There are two types of claim forms:

• Life Claimant Statement Contestable: This form is for deaths that occurred within the first two years of the certificate or if the certificate was reinstated within the last two years.
• Life Claimant Statement Non-Contestable: This form is for deaths that occurred in the third year or after the certificate was issued, and the certificate was not reinstated in the last two years.

Step 4: Gather Required Documents

Along with the completed claim form, you will need to submit additional documentation. The required documents include:

• A completed claimant's statement.
• The date of death of the member or certificate holder.
• The cause and manner of death, if available.
• A certified death certificate.
• Medical authorization (for contestable claims or those related to a living benefit).
• Police, toxicology, and coroner's reports (for claims related to accidents or homicide).

Step 5: Submit the Claim

Once you have completed the claim form and gathered all the required documentation, you can submit your claim by mailing it to: Foresters, P.O. Box 179, Buffalo, NY 14201-0179

Step 6: Wait for Review and Processing

After submitting your claim, Foresters will review your forms and contact you if any additional information is required. If your forms and information are complete and in order, they will process your non-contestable claim within 15 business days, excluding mail time.

For contestable claims (deaths within the first two years of the certificate or reinstatement), Foresters will request medical records from the decedent's medical providers, which can extend the processing time. They will provide regular updates on the status of their review. Once all requested medical records are received, they will provide a claims decision within 30 business days.

Assigning beneficiaries

Understanding Beneficiaries

A beneficiary is the person or entity who receives the benefits from your life insurance policy in the event of your death. It is a crucial decision, as it ensures that your loved ones or chosen organizations are provided for according to your wishes.

Types of Beneficiaries

There are two main types of beneficiaries: primary and contingent.

• Primary Beneficiary: This is the person or persons who are first in line to receive the death benefit from your life insurance policy. Typically, this could be your spouse, children, or other family members.
• Contingent Beneficiary: In case your primary beneficiary dies before or simultaneously with you, you can name a backup beneficiary, also known as a secondary or contingent beneficiary. If all primary beneficiaries are deceased, the secondary beneficiaries will receive the death benefit.

Choosing Your Beneficiaries

When selecting your beneficiaries, consider the following:

• Keep beneficiary designations up-to-date: It's important to review and update your beneficiaries as your life changes, such as in cases of marriage, the birth of children, or divorce.
• Be specific: Provide as much detail as possible when designating beneficiaries. Include full legal names, relationships, mailing addresses, email addresses, phone numbers, dates of birth, and Social Security numbers if applicable. This helps insurance companies verify and locate your beneficiaries efficiently.
• Consider immediate family: Typically, you would choose beneficiaries who will suffer financially from your loss. You can split the benefit among multiple beneficiaries, ensuring the total percentage of proceeds equals 100%.
• Naming minors: Children under 18 can be named as primary or contingent beneficiaries. If they are still minors when you pass away, the proceeds may be sent to the legal guardian of the child's estate. Alternatively, you can create a trust and name it as the beneficiary, allowing you to specify when the proceeds are released and their purpose.
• Special circumstances: If you have long-term dependents with special needs, consider setting up a special needs trust and naming it as the beneficiary. This ensures they can receive financial support without losing eligibility for government assistance.
• Naming charities: You can also name charities or organizations as beneficiaries, either as primary or contingent beneficiaries, to receive a percentage or all of your life insurance payout, thus leaving a lasting impact.

To assign beneficiaries to your Foresters life insurance policy, follow these steps:

• Determine your beneficiaries: Choose the individuals, charities, or entities you wish to receive the death benefit.
• Specify beneficiaries on the form: Foresters Financial provides a "Change of Beneficiary" form on their website. Download and fill out this form to specify your chosen beneficiaries.
• Provide necessary details: Include all the relevant information about your beneficiaries, such as their full legal names, addresses, and relationships to you.
• Indicate beneficiary levels: Clearly indicate whether each beneficiary is primary or contingent.
• Specify payout preferences: If you have multiple beneficiaries, decide how you want the death benefit to be distributed among them. You can assign a percentage of the death benefit to each beneficiary or divide it equally across family segments.
• Submit the form: Once you've completed the form, submit it to Foresters Financial to officially assign your chosen beneficiaries to your life insurance policy.

Remember to review and update your beneficiary designations periodically, especially after significant life changes, to ensure that your wishes are accurately reflected.

Frequently asked questions