September is Life Insurance Awareness Month

COLUMBUS, Ohio, Sept. 17 -- The Ohio Department of Insurance issued the following news release:

Life insurance may not be one of the most exciting topics to wrap your brain around, but it is certainly one of the most important, and the Ohio Department of Insurance is urging you to think about it right now. September is Life Insurance Awareness Month and a perfect time to conduct a review to assure your current coverage matches your family's future financial needs without you.

"If you don't have life insurance, you may want to meet with a licensed insurance professional to determine how best to financially protect those you care about most," said Ohio Department of Insurance Director Mary Jo Hudson. "Life insurance should be treated as an aspect of your financial planning strategy that will help your loved ones better navigate the financial waters without you if you were to die. Yes, it can be a scary topic to address, but it's a necessary one and the Ohio Department of Insurance is here to help."

Ohioans can call the Department's toll-free consumer hotline at 1-800-686-1526 for assistance and are encouraged to review a life insurance informational toolkit at www.insurance.ohio.gov. The website includes a list of licensed insurance agents and companies, and even instructions about how the Department can help you locate a missing life insurance policy.

There are many different life insurance products available and policies can be paid out in a lump sum or periodically distributed. The money can be used to cover funeral costs, uncovered medical expenses, daily living expenses, mortgage payments, outstanding loans, credit card debt, taxes, estate settlement costs, and college tuition, among many other expenses.

Guarding against unscrupulous life insurance sales practices is just as important as taking the time to select the right product. Unfortunately, not everyone has your best insurance interests in mind. The Department cautions Ohioans to watch for people peddling Stranger Originated Life Insurance - referred to as STOLI, which is illegal in Ohio. A potential policyholder is pitched an immediate lump sum payment for the purchase of a new policy, often at a fraction of the policy's real value. In return, the person pitching the deal ends up receiving the entire payout amount of the policy instead of any of your loved ones.

Aging Ohioans can choose to sell an existing life insurance policy they own to a private investor. Called a viatical, senior or life settlement, these transactions are legal and allow you to receive a payout that is more than the cash value of your policy but less than the face value. That payout amount will be more than the amount you would receive if you simply surrendered the policy. While these transactions are legal, you need to understand that your medical history and health status will be tracked by investors who purchase your policy. And finally, aging Ohioans often get talked into rolling over one annuity for another without understanding the cost of hidden surrender fees. While agents make high commissions on annuity sales, rolling over or purchasing a new annuity may not necessarily be in your best interest.

The Department's Take Action: Protect Yourself from Fraud program educates consumers about fraudulent practices in the areas of insurance and investment fraud. Ohioans can visit www.takeaction.ohio.gov to read or order the Take Action Consumer Guide, and to stay informed on the latest fraud news and alerts or contact Dottie Howe, Fraud Protection Program coordinator, at [email protected]. Ohioans who believe an agent is committing fraud or misconduct should call the Department's Fraud hotline, 1-800-686-1527.

Common Types of Life Insurance

All policies are not the same. Once you have determined how much coverage you need, it's time to find out more about the types of policies available. There are some basic types of life insurance:

Term Life: Generally less expensive than other life insurance products; covers a certain time period or to a certain age. Term is named for the contract's limited length or "term" and is pure life insurance. Term policies generally last for 1, 5, 10, 15 or 20 years, or to a specified age such as age 65 or age 100.

Whole Life: Lifetime coverage at a premium that does not increase with your age after you buy.

Universal Life: Premium amount and death benefit are flexible. You can change the amount of your premium payments and/or death benefit after buying. Increasing your premium payments as you age is important to maintaining your universal life policy.

Life Insurance Tips

* Life insurance can be complicated. Use the services of trained insurance professionals.

* Check with the Ohio Department of Insurance at 1-800-686-1526 to ensure your agent and company are licensed to do business in the state or go directly to the Agent/Agency Locator at www.insurance.ohio.gov

* Only someone who has an "insurable interest," such as someone in your immediate family, can take a policy out on your life. A stranger cannot buy a policy to insure your life. You may, however, sell your existing policy to a private investor.

* An agent is not allowed to be the beneficiary of a life insurance policy the agent has sold you, unless the agent is a family member or a funeral director.

* Compare similar policies from different companies to find which one is likely to give you the best value for your money.

* Your life insurance plan should be structured to meet your life circumstances. Be sure to review it regularly, especially if your life circumstances change.

* Be sure to calculate your total premiums for the life of the policy. It is possible to pay more in premiums than the face amount of the policy.

* Some policies have an accelerated benefits feature. This provision lets the policyholder, under certain conditions, receive part of the death benefit before he/she dies.

* Immediately study the policy once you receive it and make sure it's exactly what you ordered. Call the insurance company to verify that the policy is in force under your name.

* Take advantage of the "free-look" (or "right to review") period most life insurance companies offer. During this period you can return the policy for a full refund.

* The policy owner is the only person who can cancel the policy. If premium payments are not being made, the insurer will send a payment notice before cancellation.

* A failure to pay your premium will cause your policy to lapse or be terminated.

* Become familiar with a Retained Asset Account (RAA), a temporary repository of the death benefit proceeds. The RAA's function is to give you (the beneficiary) the time you need to consider all the financial options available. The payment of the total proceeds will be accomplished by a delivery of a "checkbook." While the documents you receive might look like a checkbook, it might actually be drafts which are similar to checks, but, different in some ways. Visit the News Room section at www.insurance.ohio.gov for more information.

TNS RadHar67 -JF78--100918-3009716 StaffFurigay