In-Force Life Insurance
(We’ll assist you on your quest for the right coverage by breaking down some common insurance terms)
Written by
Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
Reviewed by
Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.
When shopping for an insurance policy, you want to be positive of at least two things before making your decision: the kind of coverage you’re signing up for, and how much of it you’re getting. The problem is, insurance companies toss around all kinds of jargon that makes it hard to find the right type and amount of coverage for you.
With something as important as life insurance, you don’t want any gray areas or to walk away with gaps in your understanding. While there’s enough insurance lingo out there to fill a textbook, one important term to study before shopping for life insurance is “in force.” We’ll dive deep into what this term means and why it matters for you.
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What Does “In Force” Mean When it Comes to Insurance?
It’s quite simple, really. Though “in force” can refer to many different things, it’s often used when discussing insurance policies.
DID YOU KNOW?
Basically, referring to an insurance policy as being “in force” is just another way of saying it’s active.
The insurance policy’s premium has been paid, and coverage now applies to the policyholder. The policyholder keeps their insurance “in force” by continuing to pay their premium.
What Is In-Force Life Insurance?
Once someone purchases a life insurance policy and begins paying their premium, their policy is now considered to be in force. The coverage amount that’s currently active is what earns this special title. If someone states they have $500,000 worth of in force life insurance, that’s really just a fancy way of saying how much active coverage they have.
The sum total of the policyholder’s life insurance coverage that’s paid up and active accounts for how much coverage is “in force.” Say the policyholder has a $500,000 term life insurance policy and a $250,000 whole life insurance policy. As long as they’ve paid the premiums for both policies, they have a total of $750,000 of in force life insurance.
What Does "In-Force Life Insurance" Mean For an Insurance Company?
“In-force life insurance” isn’t just clever lingo for policyholders to sum up how much coverage they’ve got — the term is also used by insurance companies and insurance agents.
Insurance companies may proudly state that they have a total of $2 billion of life insurance in force. What they’re really saying is that they’ve issued enough current life insurance policies to reach a sum total of $2 billion worth of coverage.
For this claim to be true, all policyholders must have paid their premiums to keep their coverage active. Any lapsed policies would cause the insurance company to have to subtract these premiums from their total in force life insurance.
So, if they had $500 million worth of lapsed coverage, this would bring their in-force life insurance down to $1.5 billion. Insurance companies like to give out this information to help earn a reputation as a financially strong and trustworthy provider.
After all, if every single one of our example life insurance company’s policyholders were to die on the same day, the insurance company would have to pay out their entire in-force life insurance amount at once. Referencing the total value of coverage in force is also the best way to gauge an insurance company’s size.
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Why it’s Important to Keep Your Life Insurance In Force
Remember our hypothetical friend with the $500,000 term life policy and the $250,000 whole life policy? Well, if they were to miss premium payments on their whole life policy, this coverage would then “lapse,” or become inactive.
Since their whole life policy had lapsed, the policyholder would only have a total of $500,000 of in force life insurance, assuming they kept up with their term life policy’s premiums. Only their term life policy’s benefits would currently apply to them.
Insurance policies lapse when a policyholder fails to pay the premium. If a life insurance policyholder dies after they’d allowed their coverage to lapse, the insurance company would not pay out their death benefit to the beneficiary.
It’s important to keep life insurance in force in case you die unexpectedly. Otherwise, your beneficiary won’t receive the financial assistance you intended them to.
Is it Possible to Make a Lapsed Policy In Force Again?
In a word, yes. While different insurance companies have their own stipulations, it’s important to know that life insurance (or any other type of coverage) CAN be reinstated, or returned to its “in force” status.
The policyholder often just has to begin paying the premiums again in order to reinstate their coverage. However, there’s usually a time limit to revive a lapsed policy, and it varies by insurance company.
How to Find the Best Life Insurance
In order to get the protection you need and deserve, you’ll want to work with a trusted expert. Independent insurance agents will not only know where to find the best coverage and price but also help to make sense of the fine print.
Consider your unique needs, then connect with an agent to help you take it from there. Have a list of your specific concerns and desires handy before you reach out to help the process run even smoother.
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Compare Life Insurance Quotes with an Independent Insurance Agent
We all know how valuable your time is, so why spend it doing all the hard work yourself? From term and whole life insurance policies to special add-ons, our expert independent insurance agents will help you determine what type of coverage makes the most sense for you.
Our independent insurance agents stay on top of the insurance industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage at the right price for you.
They’re not just there at the beginning either. If disaster strikes, your agent will be there to help walk your loved ones through the process of getting the benefits they’re entitled to. Now that’s thinking ahead.