Lost Your Job?
In this current economic climate job security is a thing of the past. The private sector has done its best to "hold strain", but there comes a time when employees have to be made redundant or their hours cut to keep a business viable.
I remember when I was growing up people around me would relish the idea of becoming a civil servant. Once you became one you remained one for the rest of your life and that idea was so attractive that it became a full time ambition. If anyone was given the opportunity to be employed temporarily by the government, the whole neighborhood would be happy and encourage you to hold on as long as possible until you got a permanent placement. Gone are those days. The government recently sent home the untouchables and that was ominous, even if warnings were issued, many still hoped for the best. I do agree that they were temporary employees, but the sheer numbers are a sign of where the coveted title of civil servant is headed.
In all of this the bills still have to be paid and at some point unemployment benefits run out. What do you do as a life insurance policy holder who knows the importance of the product, but has no money to stay protected (covered)? I will do my best to offer some solutions which will help you to save your policy.
Options Available:
1. APL - Automatic premium loan
APL or Automatic Premium Loan is built into a policy to protect you and delay your life insurance policy from lapsing. Imagine if you lost your job and could not continue to pay your policy premium at the schedule times even though you had made a commitment to do so. The policy would not be able to remain on the books and provide for you and your family in the event that death, dismemberment or disability occurred. In order to keep your policy going until you find yourself in a better financial position and return to paying the policy as you should, the APL borrows from the cash that would have accumulated on your policy.
Keep in mind that there is a limit to how long the policy will remain in force with the automatic premium loan. The cash will run out at some time, and the policy will lapse. It is best that you return to paying your policy as soon as possible. The APL (automatic premium loan) is a loan, and as with all loans you are expected to pay it back. The interest charged is very low, but it is in your best interest to pay back the loan. If you do not pay it then the balance is tied to the amount of life insurance coverage you would have purchased, and when your beneficiary comes to claim, the outstanding loan amount plus interest will be deducted from the death benefit. This defeats the purpose of purchasing the policy in the first place to protect those you care about from financial hardship should you no longer be able to provide for them due to your death.
2. Reduction
If you lose your job or end up having to work less hours, then all hope is not lost. You can choose to reduce your policy coverage so that the premium payable will decrease and become more manageable. Example- your initial purchase of a $500,000 life insurance policy cost you $100 per month, unfortunately you lose your job or is forced to work less hours, resulting in less pay. You can elect to have your policy reduced to half the amount of coverage than you have- $250,000 and pay $50 each month. This would give you a chance to save your life insurance policy from dying and as soon as you recover financially, then you can opt to increase your coverage back to the original amount or even more.
3.Paid Up
The real reason behind the purchase of your life insurance policy is to : Take care of you final expenses without putting that burden on others; Leave money for your family to pay any creditors who will come knocking when you die; Ensure that your family or loved ones will be able to maintain the same standard of life and pursue their dreams even in your absence as a result of death; Supplement your retirement income; Use as security against loans/mortgage etc.
When you lose your job or get your hours reduced, the money that you have (if any) becomes stretched and it is understandable that you would want to cut back on some things - even things that are way too important - such as your life insurance policy. To stop paying your policy and leaving yourself exposed to the the risks for which you purchased your policy should never be considered, if you truly understand the reason for purchasing it in the first place. Remember that a decision to stop your policy doesn't only affect you, but it also affects those you love. If it's hard for them now with you having no job or less money, imagine if your weren't around due to your death, and no insurance to provide for them.
You can come into your life insurance provider (company) and ask if your policy can be made Paid Up. Paid Up means that the cash values that would have accumulated over the years can be used to purchase a reduced amount of coverage and you will remain covered for life.
I hope that you have found my post informative. Feel free to message me anytime should you have any questions.
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