Life insurance is an important and necessary product for many families in California. California term life insurance provides policy owners a mandatory free-look period when establishing the policy and a grace period to protect policyholders from cancelation due to late payments. Policyholders are protected further by the California Disability and Life Insurance Guaranty Association that insures policies against insurance company insolvency. California Free Look Period The free-look period is the amount of time a new policyholder has to change their mind after a life insurance policy has been purchased. The insured can cancel the policy during the free-look period without any penalties and to receive a refund of any premiums paid. The free-look period on California life insurance plans is 10 days, some companies do allow a 30 day free-look period. Another benefit for life insurance policy owners in California is the grace period provided by insurance companies. California Grace Period A grace period is the time frame between the premium due date and the last possible day to make the payment before the policy lapses and cancels. The grace period is important protection for the unintentional missed premium payment or late payment. In California the grace period is 30 days and that gives consumers nearly one month to get a forgotten payment to the insurance company and have it applied in time to prevent the policy from canceling. So long as the payment is received within the grace period the policy remains current. California Disability and Life Insurance Guaranty Association Another way that policyholders’ life insurance policies are protected is through the California Disability and Life Insurance Guaranty Association. This association was designed to pay claims in the event that an insurance company becomes insolvent and unable to pay claims. The association has a restriction on the amount they will pay; the California Disability and Life Insurance Guaranty Association will pay a maximum of a $250,000 death benefit or a maximum of $100,000 cash surrender. California Claims and Misrepresentations In California insurance companies have up to two years to question any application answers submitted on the life insurance application and any misrepresentations can result in the termination of the policy. Age discrepancies may not cause the policy to be canceled but the policy will be adjusted to the correct age. In California suicide is not covered as a death benefit claim within the first 2 years of the life of the policy, but premiums would be refunded in the event of a suicide within the first two years. California term life insurance products are much the same as another state, but there are some differences. For California residents it is important to understand what those differences are so that they have optimum protection and understand their rights as policy owners. Policy owners should know their free-look period when they sign up for a life insurance policy and they should understand their grace period. The California Disability and Life Insurance Guaranty Association protect life insurance policy owners in California up to a specified dollar amount.
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