If you’re shopping for life insurance, you’re going to hear a lot of terms that you may not be familiar with. Some of those terms are easy to define; however, others can be confusing.

For many people, one of the confusing terms is “in force”. It’s important to ensure that you have a complete understanding of your life insurance policy and all of the terms that are related to it so that you fully understand what you are purchasing and what type of coverage it offers. If not, you could end up having gaps in your coverage, which means that something you think is covered won’t be.

Below, we explain what life insurance “in force” means so that you can have a thorough understanding of the term.

What Does “In Force” Mean?

The term “in force” can be used for virtually any financial contract; however, it is most commonly used with insurance, and more specifically, with life insurance.

In the most basic terms, “in force” means that a life insurance policy has been paid and that it is active. As long as you continue to pay the premiums, your life insurance policy will remain “in force”. If for any reason, you do not pay the premiums on your life insurance, your policy will fail to be “in force”. If that happens, your coverage will lapse. If your policy lapses, when you pass away, your insurance provider will not pay out the death benefit of your policy to your beneficiaries. In other words, if your beneficiaries file a claim against your life insurance policy, they will not receive a payout.

The Term “In Force” and How it Applies to Life Insurance

“In force” is a term that can be used by a policyholder when he or she is speaking about his or her own life insurance policy, or it can be used by an insurance provider when talking about the financial strength of their company.

Policy Holders. When the term is used by a policyholder, they are simply referring to the total amount of life insurance that they have and the amount that is paid and active.  In other words, the current death benefit of the policy. For instance, if an individual has a $200,000 whole life insurance policy and a $100,000 term life insurance policy, if that person has paid the premiums for both policies, he or she has a total of $300,000 in life insurance “in force”. However, if the individual does not pay the premiums for his or her $200,000 whole life coverage, yet has paid the premiums for the $100,000 term life coverage, his or her whole life policy has lapsed and only has $100,000 worth of life insurance “in force”.
It’s important to note that life insurance policies that lapse can usually be reinstated, as long as the unpaid premiums are paid within a specific amount of time. However, the rules regarding the reinstatement of a lapsed life insurance policy will vary from insurance provider to insurance provider.

Insurance Carriers. When you are speaking to an insurance agent and he or she mentions “in force” life insurance, the agent is referring to the amount of money that has been paid up by all of the policyholders they ensure. The term is used by insurance carriers as a way to showcase their value and to let prospective buyers know that the company has the financial strength and should feel confident in choosing the provider for their life insurance needs.

For example, if an insurance agent mentions that his or her company has $5 billion in “in force life insurance”, the agent is referring to the amount of money that policyholders have paid toward their premiums.

For most big insurance companies, the amount of insurance that is “in force” is valued in the tens or hundreds of billions of dollars.

Why Understanding the Term “In Force” is Important

When it comes to policyholders, the term “in force” doesn’t have much weight. They are simply stating how much money they have in life insurance. However, if you are shopping for life insurance, it’s important to understand this term because it is a measure that indicates the financial stability of the provider you are considering.

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