Life Insurance: Coverage for you and your family

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PostPosted: Sun Feb 07, 2010 12:02 am   Post subject:   

Quote:
WHAT WILL THE PREMIUMS BE ON A $I,000,000. POLICY TO GO TO MY ESTATE AT THE TIME OF MY DEATH?




Why do you want the $1 million to go to your estate? Someone with an insurable interest must be the beneficiary....we need some more details. How is your health? How old are you? You can run some rates on our website if you want, but more detailed info would certainly help. Here's the link: http://www.terminsurancebrokers.com/instant-quote


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PostPosted: Thu Feb 18, 2010 1:08 am   Post subject:   

Max and BNTRS: Let me commend you both for doing a great job for this person.



I honestly was getting "really" interested in this case until the name, MetLife, popped up. My lawsuits have cost mother Met around $750M and, as you might imagine, they don't like me very much.



I'm almost positive that a policy purchased in 1997, was included in at least one of the big class suits and, therefore, the policy owner has no legal recourse.



At first glance, this appears to be a case of Vanishing Premium Fraud but, I seriously doubt the old agent acted maliciously in the sale of this policy. The policy was merely a victim of drastic changes in both the company and the economy. With that in mind, I doubt I would ever take on a case like this.



I would only make one small alteration in the information given to this person. Actually, you may have previously clarified that dividends and cash value are two completely separate entities and that dividends are not generated by an overpayment of premiums - that's where cash value comes from.



Other than that, you both have done a great job!

I'm proud to have you both on my team.



Mark



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PostPosted: Thu Feb 18, 2010 2:02 am   Post subject:   

Life Insurance Dividends



Life Insurance dividends are generated by permanent participating life insurance policies. The term Participating means the policy owner receives a benefit if the company’s performance is better than anticipated (there really is an actuarial formula for this).



On the other hand, some whole life policies are non participating which means they do not participate if the company’s performance is better than anticipated. In some cases, the premiums for non participating policies are lower than those of participating policies.



Dividends are based on a mutually owned company’s [investment vs. mortality] experience and are not guaranteed



Because so many companies have demutualized in the last few years, dividends on new policies are few and far between.



When Are Dividends Paid?



Payment of a life insurance dividend indicates that the life insurance company's operating expenses, risk selection, and management experience has exceeded expectations and, therefore, the policy owner participates in this good performance.

• Dividends are almost always paid on a policy’s anniversary date, the year after which it is earned. It is equal to the difference between the policy value and the cash value in that year. The value of paid up additions, the size and age of the policy, and the amount of premiums are things considered when calculating dividends.

• The policy value is equal to the guaranteed cash value, plus the gross annual premium, less mortality and expense charges, plus any interest (typically between 2 and 4%) which may have been credited to the policy, minus the guaranteed cash value.



How Can You Use Dividends?

• Unless another option is selected prior to issue, life insurance companies typically use dividends to purchase paid up additions. Paid up additions are like little fully paid up single premium policies that never require a premium. Each of these little paid up policies have cash values and also earn additional dividends if the company does well.

• You can use your dividends to reduce the premiums of your participating whole life policy. Over a period of years, the reduction can be considerable, thereby making the premium payments on an older policy a little easier to budget.

• You can have your dividends paid in cash. If you should choose this option, the life insurance company will send you a check each year.

• Dividends can also be left to accumulate interest. Many people like this dividend option as the amount you receive over 10, 15, or 20 years can be considerable.

• When added to the policy’s cash value, life insurance dividends, if left to accumulate, could grow fairly large. This amount, of course, depends on the size of the policy and other factors.


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PostPosted: Mon Feb 22, 2010 7:39 pm   Post subject: mother dying, can the health center take money out of life i  

My mother is leaving a will. My sister is power of attorney. she said the life insurance will be taken by them for any bills that blue cross and medicaid did not pay. How does this work.


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PostPosted: Tue Feb 23, 2010 1:55 am   Post subject:   

Who is "them?" The Will will have no legal authority over the life insurance proceeds. The life insurance proceeds aren't necessarily needed to pay bills (I'm guessing medical) not covered by the insurance company and medicaid. That's something the hospital or long term care facility can go after her estate for. If there's no estate, or a small one that no one really cares about, or is very liquid, the claimant/creditor will take a bath on the charges or will take them from the estate respectively. The life insurance proceeds can bypass the estate with respect to creditor claims.

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PostPosted: Wed Mar 17, 2010 6:35 am   Post subject: Life Insurance Twists  

My sister-in-law took out life insurance on my mother-in-law about 3 years ago and changed it so that she is a lein holder on the policy along with her. If my mother-in-law no longer wants this policy out on her, can she cancel it without my sister-in-law or do they both have to agree to it. Can you have more than one life insurance policy out on a person because the other siblings want to take out a policy where all the siblings are included as beneficiaries on the life insurance? My mother-in-law has no clue what kind of insurance coverage was taken out because my sister-in-law says she can't do anything since she's now also a lein holder for the policy. Did I mention that my sister-in-law sells insurance? Something seems fishy.


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PostPosted: Wed Mar 17, 2010 6:40 am   Post subject: Last Will and Life Insurance  

If I set up an estate or Last will that indicates where I want things to go or who I want to inherit specific benefits, can that be done for my life insurance policy even if someone else is a lein holder on my policy and I don't want them to control it? Can I remove someone as a lein holder on my life insurance policy or do they need to agree to be removed?


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PostPosted: Wed Mar 24, 2010 2:21 pm   Post subject: Cash Value usage  

Can an insurance company use the accumulated cash value of a policy if the policyholder is no longer able to pay the premium--without the policyholder's permission?


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PostPosted: Wed Mar 24, 2010 8:29 pm   Post subject: Purchase of 10,000 Whole life insurance  

Mr.David P. Hut.

I received my supplement policy for medicare today and thought I would ask you about getting me a whole life insurance policy from Mutual Of Omaha. I had one UR19304886.

but Mutual had me confused about the payment. I was paying 55.00 a month thru my bank bill payment and they were trying to collect 55.00 through EFT. I believed my payments were already made however after having gone over my bank records the payments were offered but never accepted by Mutual of Omaha. I would like reinstatement of my current policy and if they will reinstate it I will pay I Feb, Mar, and Apr premeiums. Can you help me with this mess. I have tried to contact Mutual but can never get an answer and besides if you were to sell me this policy perhaps therewould be a commission in it for your agency? Any help getting this policy reinstated would be greatly appreciated by me.

Thank you

Jesse W. Mitchell

556 Caseyville Road

Collinsville, IL 62234


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PostPosted: Thu Mar 25, 2010 10:18 am   Post subject:   

Quote:
Can an insurance company use the accumulated cash value of a policy if the policyholder is no longer able to pay the premium--without the policyholder's permission?




No. However, there may be contractual language and/or something in the application that has given them this permission.



For instance, if it is a whole life policy, take a look at the application. Something called an "automatic premium loan" is probably checked. This is permission for the insurance company to take a loan from the cash to pay the premium.
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PostPosted: Thu Mar 25, 2010 3:40 pm   Post subject:   

Wow! A lot of different questions here all at once. I'll start with "Life Insurance Woes"



Quote:
If I set up an estate or Last will that indicates where I want things to go or who I want to inherit specific benefits, can that be done for my life insurance policy even if someone else is a lein holder on my policy and I don't want them to control it? Can I remove someone as a lein holder on my life insurance policy or do they need to agree to be removed?





Need to clear some confusion here. Wills and life insurance do not have much association with one another unless the life insurance money is being directed into the decedent's estate, where it is simply added to all other assets of the estate and becomes subject to claims against the estate by "creditors" of the decedent first.



In order of preference, those "creditors" fall into a few distinct categories: (1) employees of the decedent (if an unincorporated sole proprietor), (2) "Uncle Sam" (federal govt), (3) (a) state, (b) county, (c) local govt, (4) unsecured creditors (credit cards, personal loans, civil judgments), (5) anyone else with a valid monetary claim against the decedent.



[[ Secured creditors have their claims satisfied by receiving title to the security interest -- mortgages/homes, cars, boats, etc -- regardless of the value. If the property is worth less than the secured interest, the creditor generally has no additional claim unless the decedent did something intentionally to reduce the item's value or "hypothecated" the security without the creditor's consent (sold/exchanged to a third party). However, if the property value exceeds the creditor's actual security interest, the creditor owes the difference to the decendent's estate, where it will be available to satisfy the claims of the unsecured creditors. (Example: Creditor holds a mortgage with a remaining balance of $100,000. The home is worth $300,000. The creditor owes $200,000 to the estate -- or it allows the probate court to dispose of the property and receives its $100,000 (the usual course of events) and the balance goes to the estate.]]




Creditors 1-2-3, in order, are entitled to 100% of their claims until the money runs out. Creditors 4-5, if any money remains, are subject to the probate court's discretion, meaning if there is not enough money to pay all in full, the probate judge has the discretion to parcel the money in any manner he/she sees fit (within the confines of probate law) so that all receive something as their "liquidated damages" and the unpaid portion of their claims are dismissed (similar to the action of a bankruptcy court).



What this really means is that anyone the insured probably wanted the money to go to might never see a penny of the money. This is the primary reason to NEVER name the estate as the beneficiary or leave the beneficiary designation blank on the application.



A will is not a substitute for a beneficiary designation.



Having said this, let me address the second part of your question, specifically.



Quote:
if someone else is a lein holder on my policy and I don't want them to control it? Can I remove someone as a lein holder on my life insurance policy or do they need to agree to be removed?




Any changes that can be made may only be made by the policyowner. I will assume that you are the policyowner.



As the policyowner, you have the right to name and change beneficiaries, unless they are designated as irrevocable. A "lienholder" is not a beneficiary, but they have a financial interest in the death benefit. In other words, they are a "creditor" of the death benefit (not necessarily of the insured). This is entirely outside the realm of the will.



A "lienholder" will have their claim paid from the death benefit proceeds before any other beneficiary, or the estate, receives the balance of proceeds, if any. So in that sense, it looks very similar to my previous explanation of what happens to money in an estate. Other creditors of the decedent still have no claim against the money until and unless it reaches the decendent's estate. This is an absolute protection afforded both life insurance, structured settlement, and retirement plan assets (all of which are intended to have a beneficiary other than the estate).



As a creditor, a policy "lienholder" has a secured interest in the policy proceeds to the full extent of their claim. This is known as a "collateral assignment". The policy proceeds are the creditors collateral/security for some obligation that exists between the insured and the lienholder.



A lienholder is unlikely to release their collateral assignment without some exchange of value. Could be money, property, or anything else the lienholder accepts as payment in full and then signs a "Release of Collateral Assignment."



Often, a collateral assignment is given in exchange for permission to repay a debt periodically. It could be a hospital that is receiving monthly payments following surgery or treatment not covered by medical insurance. When this is true, the lienholder's claim must be supported by documentation of its "interest as it may appear." Meaning: the lienholder must present a record of payments and outstanding balance to support its claim. The other policy beneficiaries have the right to contest the lienholder's "interest" if they can provide a record of payments that differs from the one being presented by the lienholder. Obviously, this can become a very contentious situation, and could become very time-consuming, even expensive.



But, no, there is nothing anyone can do to cause the lienholder to be removed without that person's written consent. If the person is a "natural person", their claim endures to their estate if they predecease the insured.



On the other hand, a person with a collateral assignment is not the owner, and may not be able to prevent the owner from lapsing/terminating the policy. Their "interest" may otherwise be enforceable, and terminating the policy could be a "cause of action" in civil court. If the owner lapses/terminates the policy, he could still be sued for the money he/she was obligated to under the collateral assignment. And the judgment that results could become a liability of the estate -- one of the #4 unsecured creditors.



Now on to "Localmaiden" and her questions.



First,



Quote:
My sister-in-law took out life insurance on my mother-in-law about 3 years ago and changed it so that she is a lein holder on the policy along with her. If my mother-in-law no longer wants this policy out on her, can she cancel it without my sister-in-law or do they both have to agree to it.




This, too, is one of policyownership first. If "sister-in-law" is the owner, "mother-in-law" is powerless to terminate the policy. It is unlikely that the policy is under "joint" ownership, which would require the consent of both owners. If "mother-in-law" is the owner, she has the right to terminate the policy.



But the matter of "lienholder" is confusing. Your statement that "[she] changed it so that she is a lienholder on the policy along with her" makes no sense.



I assume your statement refers to "sister-in-law" naming herself as a "lienholder" in addition to "mother-in-law" as a lienholder. But if "mother-in-law" is the insured, she cannot have a collateral interest in the policy. One cannot live and die and collect.



If "mother-in-law" is the owner, she has the right to create a collateral assignment between herself and any other person. But it must be done in writing and accepted by the insurer. It cannot be a private agreement, and the insurer cannot lawfully act based upon a private agreement to which it has not consented.



So there is something missing or unsaid (or incorrectly stated) in your question and information.



As to the other part of your question,
Quote:
Can you have more than one life insurance policy out on a person because the other siblings want to take out a policy where all the siblings are included as beneficiaries on the life insurance?




Short answer: YES. A person can be the insured on as many policies as insurers are willing to offer.



Long answer: A person, however, is not entitled to an unlimited amount of life insurance. It must be demonstrated to an insurer that there is a valid legal purpose for the amount of insurance being applied for (one of the three necessary components of insurable interest).



It is a requirement in an application for insurance to inform each insurer of any other existing insurance (or insurance that has been applied for but not yet issued) on the insured. This allows the insurer to evaluate whether or not there is already sufficient life insurance on a person's life, before it offers additional coverage.



A person whose material net worth is $100,000, for example, will not be issued three or four or five (or more) $1,000,000 policies just because someone is willing to pay for them. It would appear that those persons are expecting to profit on the death of the insured, which violates the fundamental premise of insurable interest that a profit is not created by the insurance itself.



Failure to inform the insurer of existing insurance ("concealment"), is a material misrepresentation, possibly even fraud if done with intent to conceal. It would allow the subsequent insurers to rescind their policies if they have not passed into incontestability. If based on fraud, some states' insurance codes allow fraudulent applications to escape the incontestability period, and the insurers would be entitled to rescind even 20 years later (or more).



Now to your final statement,



Quote:
My mother-in-law has no clue what kind of insurance coverage was taken out because my sister-in-law says she can't do anything since she's now also a lein holder for the policy. Did I mention that my sister-in-law sells insurance? Something seems fishy.





There are a couple of problems with this. First, a lienholder does not exercise any outright control over the ownership or rights of ownership in a life insurance policy. They cannot, in most cases, prevent an owner from terminating a policy.



Their collateral interest may, however, be enforceable in civil court. If the policy is subject to a prior court order, then the lienholder may have the right to prevent a policy lapse/termination. But this is highly unusual. The lienholder might have a different "cause of action" against the insured for its claim that could be taken to civil court if the policy lapses/terminates.



If you suspect that "sister-in-law" is violating her duties as a licensed agent, this is a matter for the insurance regulator in the state her license was issued (usually the Commissioner or Superintendent of Insurance). In most states the agency is the Department of Insurance, and they will have a complaint mechanism that is fairly easy to navigate. Many states have online complaint forms that you can fill out and file in a matter of minutes. They all have toll-free complaint lines to receive initial complaints by phone or to provide information on how to file a complaint or report an agent or insurer.



Misdeeds by agents are a VERY SERIOUS MATTER, and are immediately investigated, and vigorously so in most states. Understand that it can take a year or two to complete such an investigation, if it becomes a complex matter. But if there is the least bit of wrongdoing involved, it will be discovered and prosecuted -- administratively and/or criminally. If there is no wrongdoing, you will receive an explanation of the Department's investigation and outcome.



If you have additional questions, please post them here or send me a private message.


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PostPosted: Wed Mar 31, 2010 10:33 pm   Post subject: Life insurance maturity  

Hi,



I wanted to know if I pay certain amt for life insurance policy per month do I get it back when it matures. I mean what will happen to all the premiums I pay? Also if someone is asking me to pay say $50 per month for Life insurance what should I keep in mind before going ahead with them.



I am in california and would like to know what are the options for life insurance that you have?



Would you be kind enough to answer my questions.



Thanks,



Ravi


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PostPosted: Thu Apr 01, 2010 12:10 am   Post subject:   

Ravi . . .



Cash Value life insurance policies issued in California since at least 1-1-2009 will generally have their "maturity" set at age 120 or 121, as the result of the 2001 Commissioner's Standard Ordinary Mortality Tabled (CSO 2001). The language of most such contracts will indicate that if the insured has not died by that age, the policyowner (presumably the insured) will receive the proceeds of the policy -- the actual cash value in universal or variable policies, or the face amount of the policy less any outstanding loans or interest in traditional whole life policies.



Generally speaking, the premiums you pay to an insurance company become their money. You will not get it back after the 10-30 day free look period that begins when your policy is delivered to you. Think of it like you would buying groceries at the market. You pay the cashier for your purchase and they keep your money. You have what you wanted, they have what they asked you for. If you later return an item, you get a refund, but it's really other people's money being paid to you.



Cash value policies, however, have special "nonforfeiture" provisions that prevent an insurance company from collecting your premiums for many years and you having nothing to show for it. You could get back some of what you have paid (after at least 2-3 years), but you will not get back 100% of what you have paid in unless you keep the policy going nearly to age 121. (Complex policies like Variable Life or Variable Universal Life, which tie cash accumulation directly to the stock market, can achieve greater cash accumulation in a shorter period of time -- but for $50 per month, it's highly unlikely that you are being offered a Variable policy. If you are, I can tell you with all confidence that amount of money is insufficient to support almost any Variable policy.)



Some term life policies are available with a "Return of Premium" (ROP) rider that states if you keep the policy in force to the last day of the 20 year policy term, the insurance company will send you a check for the value of the premiums you paid in all those years. It's still being paid to you, technically, with other people's money. But again, $50 per month will probably not buy you a substantial death benefit with a Return of Premium option.



Buying life insurance should not really be connected to what YOU will get out of the policy. Fundamentally, life insurance policies are designed to protect others against the lost income your death would represent. Some insurance agents will try to sell you on the concept that YOU can have your policy's cash value "tax free" in later years, but they fail to explain how this disrupts the death benefit for your beneficiary. And the words "tax free" should not really be associated with life insurance, except for the death benefit payable to your beneficiary.



Insurance is an "aleatory" contract -- there is an unequal giving and receiving within the contract. You might pay two premium payments and die, and the insurance company pays your beneficiary $1,000,000. On the other hand, you might pay premiums for 20 years and never die, and the insurance company keeps all of the payments. All insurance is essentially like this, not just life insurance.



Quote:
if someone is asking me to pay say $50 per month for Life insurance what should I keep in mind before going ahead with them.




There is no simple answer to this question. Your $50 might be purchasing a $10,000 whole life policy or a $1,000,000 5-year term policy. What you should keep in mind, regardless of the cost, is whether or not the policy will serve the purpose you intend.



What is your reason for wanting life insurance? To leave money to pay for a funeral? To fund your child's education? To provide your spouse with a comfortable lifestyle that would have been supported with your income if you had not died? To pay off your mortgage? To pay estate taxes (none this year, but they're coming back next year)? These are just a few of the questions that are important to consider. But they are not the only ones.



Quote:
what are the options for life insurance that you have?




Life insurance comes in two basic categories. TERM -- a policy that provides protection for a specific period of time (between 1 and 20 years or longer) -- and CASH VALUE -- a policy that has a duration to age 121, requires premium payments in all those years (although there are payment options that would allow you to fully pre-pay the policy in 10 or 20 years or in the number of years to your age 65 or 70).



TERM policies may be renewable (although the cost will increase with age) or convertible (without proof of insurability) to another policy which may be more favorable or suitable for your needs in later years.



CASH VALUE policies come in a variety of "flavors" from plain vanilla Whole Life, to policies called Universal Life, which are basically term policies with cash value accumulation, to Variable Life policies which include cash accumulation directly tied to stock market performance. And in between are all manner of variations.



For a stated amount of money (such as $50 per month), TERM insurance will provide substantially more protection than any other type of CASH VALUE policy. The amount of protection is also dependent on your age and insurability.



Whether term or cash value, all life policies have PROs and CONs that you must be aware of before you make a decision as to which one best fits your purpose for obtaining the insurance. An agent must be willing to share this information with you. If they are reluctant to answer your questions, you should not do business with them.



Aside from all of this, the other thing to keep in mind is the insurance company itself. Have you ever heard of it? If you haven't, what can you find out about it other than what the agent tells you?



You would want to look at independent rating agencies such as A.M. Best, or Moody's, or Standard & Poor's to see what they have to say about the company's ability to pay claims, understanding that these are not guarantees that the company will be able to pay claims. But they are a good measure of what the company is like today. An A++ or A+ company is probably not going to leave you hanging out to dry, while a B- company might give you a reason to look somewhere else for your coverage.



You would also want to check the California Dept of Insurance website for its information about the company, such as disciplinary actions and consumer complaints. The CDI does not endorse or promote one insurance company over another. They provide unbiased information based on actual data.



If you would like to know more, feel free to send me a private message with your contact information (email address or telephone number) and I will be happy to give you more advice or a second opinion. My email address is max.herr@verizon.net.


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PostPosted: Mon Apr 26, 2010 11:34 pm   Post subject: My mother  

Do you or can you insure for term life an 86 year old female?


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PostPosted: Mon Apr 26, 2010 11:38 pm   Post subject:   

There is no term insurance for an 86 year old. Transamerica offers permanent coverage guaranteed for life, but it won't be cheap. Most 86 year olds would have a very hard time qualifying medically to get the coverage.



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