Recently, class action lawsuits were filed against several life insurance companies, including Transamerica, for raising the "cost of insurance" (COI) inside of their universal life policies. What does that mean to you if you own a life insurance policy?

It may mean that your policy will lapse or become unaffordable and not be in force when you die, depriving beneficiaries of the funds you planned to bequeath. Often we find that policies are in danger when the insured is diagnosed with a serious health challenge or a terminal condition.

Life insurance contracts are complex legal documents, and they often end up in drawers and filing cabinets and rarely are reviewed. There’s an old story where the insurance agent asked a woman if she knew the value of her husband's life insurance policy.

When she asked what the agent meant, he said, "Well, if your husband died, what would you get?"

The lady thought for a minute, then brightened up and said, "Probably a poodle."

That may be funny but you don't want your estate plan to be a dog.

Let’s look at the varieties of insurance. One type, term insurance, is temporary and functions as a pure death benefit. Term is relatively cheap because most insureds outlive it. The purpose of term insurance, say for policies lasting 20 or 30 years, often is that, if you don't make it to retirement and accumulate a nest egg, money will be there for your spouse or other loved ones. The goal is to outlive your term insurance and live to a ripe old age with a happy retirement and a bucket list fulfilled.

Source : Forbes.com