by Guest » Tue May 03, 2011 01:38 pm
Took out $25K policy with Met Life in 1992 on my first born. Agent estimated 14 years of $14/month until dividends would cover premiums. Took two more similar policies with American Family for my other two children in 1997. American Family issued a letter telling me no more payments are required as of March 2011, but Met Life is stating I still have two more years to pay on the 1992 policy.
I realize the return is based on market conditions, but paying 21 years vs. 14 years on identical policies seems a little absurd. Are the folks at Met Life pulling one over on me?
I realize the return is based on market conditions, but paying 21 years vs. 14 years on identical policies seems a little absurd. Are the folks at Met Life pulling one over on me?
Posted: Wed May 04, 2011 11:53 am Post Subject:
Are the folks at Met Life pulling one over on me?
There are also a lot of other factors that you need to consider while comparing the two policies. Apart from the premiums that you're paying, you'll also need to check out the benefits offered by each of them. For that, you should read through your policy papers (check out the exclusions apart from the other terms and conditions). In the end, you may consult with the Met life agent on this.
Posted: Thu May 05, 2011 05:38 am Post Subject:
Are the folks at Met Life pulling one over on me?
Not at all. If anyone was at fault for this, it was you for believing an agent who told you something that the contract does not. Can you go after the agent for his misrepresentation. Not now -- it's been too many years.
Posted: Fri May 06, 2011 11:17 am Post Subject:
Max, you are tough on agents. We don't know that the agent misrepresented anything.
Let's assume that the agent made an estimation. His estimation was wrong. A wrong estimation isn't a misrepresentation.
Isn't if very possible that the agent said, "Based upon the current dividend scale, out of pocket premiums will need to be paid for 14 years."?
Posted: Fri May 06, 2011 11:48 am Post Subject:
Max, you are tough on agents.
And if not me, who? Of course I'm "tough" on agents, because this is the kind of stuff that gives all of us a black eye. People remember these statements, they sometimes "automatically" stop paying premiums (the OP here seems a bit upset that he cannot do what he was once told), and when their policy ends up lapsing for non-payment, who gets the blame? Agents do.
Isn't if very possible that the agent said, "Based upon the current dividend scale, out of pocket premiums will need to be paid for 14 years."?
Anything is possible. It doesn't make it right.
Insurance laws in all states say things like: The use of the term "vanishing" or "vanishing premiums" or any similar term which implies that the policy becomes paid up, or that premiums do not have to be paid, based on non-guaranteed elements is prohibited.
(this is taken verbatim from the CA Insurance Code, emphasis added)
Dividends are NON-GUARANTEED elements, because they are based on profitability. An agent is free to say, "based on non-guaranteed elements, your cash value could look like this in the future . . .", but they should NEVER imply that dividends alone will be sufficient to pay premiums.
Those kinds of statements (mainly about interest crediting rates, since most UL policies are non-participating) made by agents marketing Universal Life in the late-1970s and throughout the 1980s, sometimes with the explicit instructions of their insurance companies' executives or marketing departments, cost the UL industry, collectively, more than $2 BILLION in restitution, policyholder settlements, and regulatory penalties in the 1990s and into the early-2000s.
Call it what you want, I call it a misrepresentation. And so does the Insurance Code. You can ask Mark Colbert or InsTeacher for their independent assessments of this if you don't want to believe me.
American Family issued a letter telling me no more payments are required as of March 2011
When the insurance company puts it in writing, that's called a WARRANTY, and it has legal force. The company is obligated to honor that statement. It is not obligated to the statements of its agents, because it also puts in writing: "No agent has the authority to waive or modify any of the terms or provisions of this contract . . ." including making a statement that contradicts the insurance company's statement: "Premiums payable in all years."
Posted: Mon May 09, 2011 02:36 pm Post Subject:
By "tough on agents", I'm referring to the fact that you often assume that the agent has done something wrong without a complete set of facts. There is zero indication that the agent misrepresented something here.
First of all, we know that the owner can't remember exactly what was told to him 14 + years after the fact.
Secondly, even if the OP remembers correctly, he isn't saying that the agent said that the premiums would stop after 14 years. In fact, he didn't say that the premiums would stop.
He simply estimated that it would take 14 years until the dividends would be big enough to pay the premiums.
It's unfair of you to assume that the agent didn't say, "based upon the current dividend scale, the dividends can pay the premiums on the policy after 14 years. The dividends are not guaranteed, so it can take longer or shorter."
We don't know what was said. I just think that it's wrong of you to assume the worst. Believe it or not, Max Herr is not the only ethical insurance salesman.... oops, I'm sorry, I forgot that you don't sell insurance. What is it that you do again? That's right, you "provide solutions", but you get paid $0 for these solutions unless the "solution" is for the person to buy life insurance from Max Herr.
Posted: Mon May 09, 2011 10:00 pm Post Subject:
There is zero indication that the agent misrepresented something here.
Well, you can take a person to the Insurance Code, but Ii guess you can't help him understand it . . . until perhaps after he's been convicted. If the agent IMPLIED or STATED that no premiums would be payable after some period of time based on NON-GUARANTEED elements of a contract, then, yes, whether you want to believe it or not, he committed a violation of his state's Insurance Code.
As I said, if you don't want to believe me, fine, then ask Mark Colbert, who knows, or InsTeacher, who also knows.
Posted: Tue May 10, 2011 03:30 pm Post Subject:
Mr. Herr, you are correct IF, and only if, the agent IMPLIED or STATED that no premiums would be payable.
What you seem to be missing is that there is no evidence that the agent did this. In fact, from the original post, it seems quite likely that the agent made it clear that premiums would need to be paid and it was only a question of whether they would be paid out of pocket or not.
From experience, it should also be clear to you that the 14 years was based upon the then current dividend scale.
Without evidence to the contrary, it is simply wrong to assume that the agent did something wrong.
Posted: Tue May 10, 2011 05:11 pm Post Subject:
Please reread the original post. Second sentence states:
Agent estimated 14 years of $14/month until dividends would cover premiums
Please . . . tell me how the insured would know this if it was not communicated verbally or in writing by the agent?
It was either presented in an illustration of some sort, or it was a statement spoken or IMPLIED by the agent. If the insured believed, as it appears he did, that what was represented was the absolute truth, he (1) has a right to be upset that he will be paying much longer than he expected, and (2) if he had raised this issue within the first two years of the policy's issue, he could have had the contract voided on the basis of misrepresentation.
it should also be clear to you that the 14 years was based upon the then current dividend scale
Sure, it could have been. And from experience, you might be able to understand what I previously posted as well:
The use of the term "vanishing" or "vanishing premiums" or any similar term which implies that the policy becomes paid up, or that premiums do not have to be paid, based on non-guaranteed elements is prohibited.
That comes directly from the CA Insurance Code, and other states use very similar language, because it was developed by the NAIC more than 20 years ago.
Posted: Tue May 10, 2011 11:18 pm Post Subject:
Vanishing premium terminology is a problem because premiums do not stop. The agent gave no indication that premiums would stop. He gave an estimation of when he thought that dividends might be able to pay the premiums.
Posted: Wed May 11, 2011 02:55 pm Post Subject:
Agent estimated 14 years of $14/month until dividends would cover premiums
Sorry, Mr. Herr, but dividends covering premiums does not mean that premiums disappear. It is perfectly legal to show illustrations that show the dividends paying for premiums. This is not a vanishing premium. A "vanishing" premium means that premiums are not paid. If a dividend is paying for the premium, the premium has not vanished.
The illustration would show what happens at the current dividend scale and would also show what would happen at guarantees.
Is it possible that the agent did something wrong? Sure. Is there any indication here? No.
Add your comment