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By Baruch Lorio
SB Informer Contributing Author
Wednesday, September 12, 2007; 02:26 AM

Miami , FL --Life insurance can come to the rescue of victims of Hurricanes Katrina and Rita, many of whom were left homeless and jobless in the Gulf Coast states. They might not realize that they can get financial assistance from the life insurance policies they own.

Statistics show that over half of all life insurance policyholders own policies that have cash value-various forms of traditional whole life, universal life, and variable life, as well as some long-term term policies.

According to a report by the Insurance Information Institute "one of the best uses of this cash value is a loan-money that can be borrowed from the policy without waiting for the lender´s approval," says economist Steven Weisbart.

The report specifies that since the money is a loan it´s not taxable income. The life insurance company will charge interest on the loan, which must be paid back, either through loan repayments or, if the insured person dies, as a deduction from the death benefit that would otherwise be paid.

The interest rate on some policies is fixed, but most are variable, based on current interest rates.

Borrowing from the cash value is also a way to pay premiums on the life insurance policies that come due while victims' lives remain disrupted.

In cases of families who have lost loved ones to these disasters, survivors who are named beneficiaries can get help from any life insurance policies in force. "The funds from that life insurance policy you had forgotten about can help a family survive at a time of terrible grief and loss," says Eugene Gordon, Chief Executive Officer of LifeQuote ( http://www.lifequote.com ), an online life insurance shopping service. "The payouts from even the most affordable term life insurance policies can have a huge impact when a family needs it the most," added Mr. Gordon.

In order to submit a claim you should locate your policy and contact the life insurance company directly. If you can't find your policy but have the name of the company, or the agent who sold you the policy, contact them.

If you can't remember the name of your life insurer, review bank statements, credit card records, and other forms of payment. Much of this information can be accessed electronically, even if you do not have the original paperwork.

If none of that works, your state insurance department may be able to give additional advice.

In order to pay a death claim, a life insurance company normally requires an application for benefits and an official death certificate issued by a county board of health.

However, according to the Insurance Information Institute, since Katrina also destroyed the functioning of many of these county offices, most life insurance companies will accept other proofs of death-such as a sworn statement by a funeral home director or a physician, or a hospital record-until normal operations can resume.

Still, insurers will be careful. In the past, some ineligible claimants have tried to take advantage of liberal claims procedures to get money to which they weren't entitled, and insurers will challenge questionable claims.

Employer-sponsored group life insurance might be another source of benefits. Many people don't know which insurance company provides their employer-sponsored group coverage, so they may have to work through their employer to file a claim, recognizing that many employers in the affected area might not have immediate access to records.

The only time people usually think about their life insurance coverage is in times of need," says Mr. Gordon of LifeQuote. "Natural disasters show us to be prepared; keep your policies up to date and safeguard that paperwork so that it´s not lost in Hurricane damage," he adds.

Baruch Lorio from Miami, Florida LifeQuote.com.



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