The only life-insurance policy that really matters is the one that is in force on the day you die. Having said that, some life insurance (chiefly, term) is supposed to be in place only temporarily. This sort may protect dependents and survivors against the loss of a person's income during his or her working years. But it is designed to fall away once dependents move out or retirement plans are complete. However, other contracts might be intended to serve as final-expense policies, legacy-planning vehicles, tax shelters, and many other things besides. For these contracts, lapsation or policy lapse could be disastrous to a family's end-of-life or estate planning.
Regardless of your specific situation, you can benefit from being aware of some of the alternatives to policy lapse.
In this video, I enumerate approximately nine (9) options. (Some of these include so-called "non-forfeiture options" that are often spelled out in the contract language.)
(1) Cash surrender
(2) Reduced-paid-up (RPU) election
(3) Extended-term-insurance (ETI) election
(4) Conversion or exchange
(5) Replacement or re-rating
(6) Assignment
(7) Acceleration of death benefit (if chronically or terminally ill)
(8) Viatical settlement
(9) Life-to long-term-care transformation or exchange
You may also want to explore various dividend options, if you have a cash-value policy with a participating company. For more, see:
Be aware that not all of these options are available with every kind of insurance, and not all are available through every carrier or contract type. Making changes to your life-insurance coverage should not be done lightly. Many options are irrevocable or unalterable. Additionally, some options have tax consequences. You'll need to discuss your alternatives with knowledgeable professionals, possibly including accountants, attorneys, insurance agents, tax preparers, and so on.
For a list of some potentially helpful advisers, see:
For more information on long-term care, see:
Disclaimer: I am not a financial adviser. This video is intended for general informational or entertainment purposes only. Nothing herein should be construed as financial, insurance, investment, legal, long-term-care, savings, retirement, tax, or any other kind of advice. If you need personalized recommendations, consult a licensed professional in your area.
For further reading, please visit:
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