The Spoilers of Spendthrift Clauses

What is a spendthrift clause life insurance? It is a part of the terms and conditions that come with the policy of a particular insurance. Under such an agreement, if the insured dies within a certain period of time, then the beneficiary of the policy - usually the family members - would not have to pay out anything on the policy. The insurance company would pay the death benefits to the beneficiary.

Under ordinary life insurance policies, the insurer pays all or most of the death benefits to the beneficiaries upon the insured person's death. If you die before the contract ends, you are still entitled to it. This is because the policy has a specified term. If the term has expired, then there is no more money to pay out.

A spendthrift clause, on the other hand, provides that the insurance company will not pay anything on the death benefits for the policy holder if he or she dies within a certain amount of time. This means that you would only get the money if you were still alive. In addition, the spendthrift clause does not affect the amount of money that your loved ones can get. Also, this clause gives them the freedom to spend the money however they want. It is like providing an additional earmark for your estate in case you should die before the contract ends.

Of course, this type of insurance has its problems as well. The main problem is that people who hold such contracts generally tend to have poor health when they are actually alive. They then become ineligible for benefits. This leads to an increase in premiums.

However, this problem can easily be solved by choosing a policy that has a term limit. For example, the coverage might be for a fixed period only. Such a policy is much cheaper than those that cover a long term. It is also more practical, as it allows the person to shift towards a more affordable life insurance plan once he or she is old. Still, this should be done after consulting your doctor to ensure that you do not have any pre-existing medical condition.

Another problem related to the spendthrift clause is that many people tend to think that, since they are paying money for life insurance, it therefore makes sense to be covered for them all their lives. This leads to the policyholder being covered for every conceivable event, even the worst. If Insureinfoq happens, one might think that it is better to take a cheaper policy. However, you should always remember that you have a right to void the policy and go for another one.

This is where the help of a specialist in life insurance can be very helpful. These people know all about these clauses and can help you get out of this mess. If you still insist on sticking with the policy, then you might want to consider the fact that you might not want every possible thing to happen to your loved ones. You should therefore check the fine print of the policy carefully. There might be a time when the insurer will offer to cancel the policy without any penalties being applied in the future.

Even if you do get your money's worth by using the provisions of the spendthrift clause, there are still chances that the insurer will not compensate you fully. For this reason, it is important that you consult a professional life insurance agent before you actually take out the policy. He or she will tell you whether or not you really need to include such clauses in your life insurance. In case you do, then you might want to think twice before you proceed.