When sorting and organizing our clients’ piles of papers and files, we often find they’ve overlooked correspondence and documents related to their insurance policies. This often results in them missing important information that impacts their payments and coverage.
Where to Start & What to Know
If you are helping your parents organize their financial life, look carefully through stacks of mail, papers, magazines, and newspapers; search through file drawers; and check coat pockets, purses, tote/grocery bags, and briefcases. And don’t forget their email!
Types of insurance policies you might find:
- Long-Term Care (LTC) Insurance – Don’t assume there is only one policy. Some people have multiple policies, and for couples, each person would have their own.
- Life Insurance
- Homeowner’s Insurance
- Flood Insurance – This is often separate from Homeowner’s Insurance.
- Umbrella Insurance
- Renter’s Insurance
- Auto insurance– Even if someone doesn’t own a car, they may have uninsured motorist coverage.
- Pet Insurance
- Disability Insurance
- Health Insurance – Primary, secondary, and/or drug coverage
Possible consequences of unpaid insurance premiums and canceled policies:
- Inability to restore the same type of coverage
- Total loss of coverage and loss of coverage eligibility
- A gap in coverage due to enrollment regulations
- Paying out of pocket for an otherwise insured event
- Premium increases
- Changes in the type of coverage
- Extensive time and effort devoted to interaction with insurance companies
What to Do If Coverage Lapses
Most companies have options for unpaid premiums and policy cancellation:
Most life insurance companies offer a grace period of 30 days or so for customers to catch up on payments and resume coverage. The grace period may vary for term and whole-life coverage.
Homeowner’s Insurance companies typically offer a 30-day grace period. However, coverage will be canceled if premiums are not paid before the grace period expires. The mortgage company will be notified, and a new policy will be purchased on your behalf. The force-placed policy will have higher rates and possibly less coverage.
Auto insurers offer a shorter grace period, usually 10 to 20 days. If a policy lapses, reinstating or purchasing a new policy will involve higher rates and possibly reinstatement fees. Be aware that the DMV has strict regulations about auto insurance and that cars cannot be driven while uninsured.
How We Can Help
When our clients experience a lapse in coverage due to unpaid premiums or have canceled policies, we help them find a solution. Alongside the client, we contact their insurers and negotiate for a reinstatement or new policy. Here are some examples of such cases.
Medicare Part D Lapse
One of our clients received notices that the auto-payment for her Medicare Part D premium was unsuccessful. However, she did not share the notices with her Eddy & Schein Client Manager.
Once our client granted permission to review her piles of papers, her Client Manager discovered the insurance company’s termination notice.
Together, they called the company and learned she could not be reinstated until the October Open Enrollment period.
This news was of great concern. Our client’s coverage would not begin until January, and her medications were expensive. She would be paying out-of-pocket for ten months.
However, the Eddy & Schein Client Manager spoke with the pharmacy and helped our client access the GoodRx discount, which reduced her medication costs.
Long-Term Care Lapse
After a client neglected to pay her Long-Term Care (LTC) Insurance premium, a fall landed her in the hospital, rehab, and then an assisted living facility.
We were asked to work with her on her finances. In the process, Eddy & Schein’s Client Manager looked through her accumulated mail and discovered that her LTC policy had lapsed.
Her Client Manager worked at length with the insurance company. She submitted several forms and then arranged for a nurse to confirm the client’s health. The Client Manager’s efforts paid off for our client, and her policy was reinstated.
Soon afterward, our client needed home health aides due to her advancing dementia. With the policy back in force, we submitted a claim, and the insurance company covered our client’s home care costs.
How to Avoid Lost Insurance Bills and Missed Notices
- Create a list of all insurance policies, renewal dates, and premium payment due dates.
- Add premium payment and annual policy review dates to your calendar.
- Add Third-Party Notification to the insurance accounts so a family member or trusted advisor can receive alerts for unpaid premiums and other billing notices.
See other articles in this series –Part 1: “Stock Documents Buried in Piles of Papers;” Part 2: “Cash Stashed Under the Mattress;” and Part 3: “Uncashed Checks Going Stale.”
For information on our services in this area, please visit our LifeKeeping page.