14 Oct Why did I get this notice about my father’s life insurance?
Q. My father has a whole life policy and I just got a payment reminder notice for his account. But the payment wasn’t late and I have nothing to do with it. He said he doesn’t remember telling them to send me any, and actually, he doesn’t like me being in his business. What gives?
— Not sure what to do
A. We understand if your father may have privacy concerns, but there are great reasons for him to have someone receive these reminders.
Applications for life insurance as well as other types of insurance often include a section for the applicant to name someone to be notified if a premium is due and is within the “grace period,” said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.
He said the premium is technically late but the policy is in no danger of lapsing provided the premium is received within that grace period, he said.
“So since you were notified, that is the likely answer as to why,” he said.
The idea is so that a policyholder, who could end up ill or otherwise be unable to manage their affairs, has a back-up plan in place.
One other safeguard insurance companies often put in place is to send out a letter to existing policyholders once they turn a certain age, such as 60, asking if they’d like to name someone to be notified if a premium is due and is within the “grace period,” he said.
“It’s a good practice but can certainly be a surprise if the receiver of the letter is unaware,” he said. “Your father can certainly ask that insurance company to remove you from that safeguard by calling life policyholder services.”
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This story was originally published on Oct. 14, 2021.
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