Some policies have provisions which do this automatically. These are called COLAs (Cost Of Living Adjustments). However, with most policies you are required to keep track of your own coverage needs. Due to inflation the value of the dollar can be reduced by as much as 50% or more every five to ten years. In addition, your financial circumstances may change. Therefore, you should monitor your insurance amounts annually.
What is ERISA?
ERISA stands for the Employee Retirement Income Security Act. ERISA is a federal law that was enacted for the purpose of protecting employee benefits.
ERISA applies only to certain classifications of employees who have obtained their policies at their place of employment. If a policy is governed by ERISA you lose important insurance consumer protections provided under the laws of your state. You should attempt to avoid ERISA governed policies at all cost.”
Can an insurance company cancel or refuse to renew a policy?
In most states, insurance companies cannot cancel a policy in mid-term except under circumstances such as non-payment of the premium or fraud by the policyholder. Some states may also permit the insurance company to cancel the policy for other reasons.
Even in states that permit mid term cancellations, most of them require the insurance company to give you 30 (thirty) to 90 (ninety) days WRITTEN notice. This is intended to give you an opportunity to obtain substitute insurance.
In most situations, insurance companies can refuse to renew a policy at the end of the current term as long as the refusal does not violate the existing contract. For example, some policies are guaranteed renewable or are written for a multi-year term. These types of policies must be renewed. Most others do not have to be renewed.
In most states, insurance companies can refuse to renew your coverage for any reason. An insurance company may decide to stop selling a particular line of insurance or policy, or it may change its underwriting criteria, or it may decide that the policyholder’s risk has changed. Regardless, it may decide not to renew your policy as long as you are provided adequate notice.
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Although insurance regulations do differ somewhat from state to state, except for the remedies available for unfair claim handling practices, most insurance laws are similar from one jurisdiction to another. With that in mind, the FAQs that follow are generally applicable throughout the Country. Nevertheless it’s always best to double check on important issues with a local expert.