February 23, 2011
- When you miss an insurance premium payment, you have 30 days to make up this payment. The insurance company cannot cancel your policy. When you make your payment, you must also be aware that future payments are due on time. Each payment is allowed a 30 day grace period, however. So, if you get behind one month, but can only afford to pay one month’s premium, you’ll constantly be behind in your payments, and you’ll always be in the grace period for the previous premium payment. The insurance company may not pay the death benefit until your premiums are current.
- The insurance company must settle your death benefit claim within two months of receipt of death. If it does not, then the insurer may pay interest on your death benefit amount. Generally, this means the insurance company invests the premiums into the insurer’s general account. The insurance company’s general account (which pays a fixed rate of return).
- Tennessee protects you in the event that your insurance company fails. As of February 2011, the Tennessee Life and Health Insurance Guaranty Association guarantees that you will receive at least $300,000 from any life insurance policy as a death benefit. Cash value surrender guarantees are limited to $100,000. Both of these guarantees are limits per person, regardless of the number of policies they hold. If the aggregate policy values exceed the guaranteed amounts, you still only receive the maximum guarantee amount.
- Your life insurance policy is protected in the event of bankruptcy or in the event you are sued by creditors. If the beneficiary named on the policy is a spouse, child or dependent relative, the proceeds of the policy are wholly exempt from creditors. These protections are outlined under Tennessee Code section 56-7-203.
30 Day Grace Period
Death Benefit Settlement
Bankruptcy & Creditors
by Ethan Leak