Wednesday, January 7, 2004
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Wednesday, January 7, 2004 |
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Questions and answers from Oxendine Q: I cashed in a $5,000 paid-up life insurance policy and only got $1,200. Why? A: Part of the premium you pay for your life insurance is used to pay for the cost of the death benefits, agent’s commissions and office expenses. The remainder is available to the policyholder as cash value. For this reason, a $5,000 policy would not have a $5,000 cash value. Q: I filed a death claim on my husband’s life insurance policy two months ago. The claim has not been paid yet. How long does it take to receive the death benefits, and does the insurance company have to pay interest on the money they owe me? A: Generally death claims are paid within 30 days after the insurance company has received all the necessary forms. If a policy is less than two years old, the insurance company can investigate to find out if there was any significant misrepresentation on the original application. If there is an investigation for any reason, the claim may take longer to process. Usually the insurance company will pay interest on the death benefits if the claim is not paid within 30 days of the filing. Q: I have a whole life insurance policy and need to borrow some money from it. How much can I borrow? A: Most policies have a positive cash value after three years. You can estimate the cash/loan value of your whole life policy by referring to the cash value table it contains. The loan value will be the cash value minus one year’s interest, which will be deducted from your loan. Q: How can I change the beneficiary on my life insurance policy? A: Only the owner of an insurance policy can change the beneficiary. If there is more than one owner, each owner has to sign the request form for the beneficiary change. All requests must be done in writing by sending the appropriate insurance forms to the policyholder service department of the insurance company. When the insurance company sends you the executed beneficiary form, it should be filed with your insurance policy. (Please send your insurance or fire safety questions to Insurance and Fire Commissioner John Oxendine, 716 West Tower, 2 Martin Luther King Jr. Drive, Atlanta, GA 30334. Or call 404-656-2070 (toll free at 1-800-656-2298) for assistance with an insurance question, Monday through Friday, 8 a.m. to 7 p.m. TDD services available at 404-656-4031.)
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