Why Is It Important to Keep Life Insurance Policies up-to-Date?

Why Is It Important to Keep Life Insurance Policies up-to-Date?

Keeping life insurers up-to-date about an address or any personal information changes is one of the most effective things a policyholder can do to decrease the chance of running into problems when making a claim, advised the New York State Insurance Department.

The department said this was emphasized to them recently when they were contacted by a New York City man who almost lost his life insurance after he neglected to update his address with his life insurance company. The insurer had been billing the man at his old address, and when he finally realized his policy was about to lapse and charged the fee to his credit card, it was not applied correctly to his account.

The NYSID eventually helped the man reinstate his policy, but learned that small mistakes can easily lead to a canceled or lapsed policy.

“Consumers should always try to communicate in writing to avoid misunderstandings and they should always make a good effort to follow-up to make sure issues are handled properly,” said Insurance Superintendent James Wrynn.

The struggling economy may be affecting the demand for life insurance and causing more people to lapse on their policies, as LIMRA reported that the number of households in the nation with a policy is at a 50-year low.