can insurance co take cash value without consent to pay prem

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PostPosted: Tue May 26, 2009 6:39 am   Post subject: can insurance co take cash value without consent to pay prem  

can insusarance company take mone form cash value or universal life insurance policy to pay premeium without consent from insured?

ShirleyScott
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PostPosted: Tue May 26, 2009 10:34 am   Post subject:   

Quote:
can insusarance company take mone form cash value or universal life insurance policy to pay premeium without consent from insured?




I think that's the way the policy document would read.



The universal plans would have the feature that allows the policy to continue even when the insured stops paying the premium.



Most universal plans would require the policy holder to pay premium for certain period of time at least. After that the policy would run on the cash value accumulated on it even if the insured stop paying regular premium.



You may wish to tell us more about your situation so that we can have better comprehension and guide you properly.
jeorge
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PostPosted: Tue May 26, 2009 12:14 pm   Post subject: insurance  

how does THAT happen? With different Insurance plans ( ie: Medical, Dental) if you stop making payments on them, then you aren't covered for that particular time the payments were NOT made. Or..with a Life Insurance policy,...my 'personal' Insurance company can 'drop' the policy if you don't make payments. How can your Universal policy continue if you stop the payments? I don't know much about Universal policies.

sdchargersfan
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PostPosted: Tue May 26, 2009 12:28 pm   Post subject:   

Quote:
With different Insurance plans ( ie: Medical, Dental) if you stop making payments on them, then you aren't covered for that particular time the payments were NOT made. Or..with a Life Insurance policy,...my 'personal' Insurance company can 'drop' the policy if you don't make payments. How can your Universal policy continue if you stop the payments?




None of the above policies (Term Life, Health, Dental, etc.) build any cash value. You are paying a premium to continue coverage. However, a universal plan builds cash value. Here's an example:



Insured pays $35 a month for universal policy and pays for 3 years. After 3 years she is laid off and is unable to make her payments. Her policy has built up $175 in cash value (just an example). In most policies, the wording is there to allow the company to use the cash value to pay the premium. So for the next 5 months her $35 a month premium would be paid. After the 5 months she will receive a cancellation notice that will allow her to either continue payments or let the policy cancel itself.



Some universal policies do not have this feature built in automatically. I have seen notices generated after the first month of non-payment that have several options on them. The insured can either cancel the policy (surrender it) and cash out the value...or they can start paying again...or they can ask that the cash value can be used to pay the premium.



Another choice that many insurance companies will offer a client will be a loan based on the cash value. This will actually allow them to pay the premium and the cash value is not diminished (simply places a lien on a portion of the insurance). How each company does it varies a little bit...but it's all the same idea.
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PostPosted: Tue May 26, 2009 1:44 pm   Post subject: insurance  

THAT'S a good clarification!! thanks. Is Universal a 'Whole' or 'term' thing ( or is there any such thing with Universal)?

sdchargersfan
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PostPosted: Tue May 26, 2009 11:49 pm   Post subject:   

Quote:
THAT'S a good clarification!! thanks. Is Universal a 'Whole' or 'term' thing ( or is there any such thing with Universal)?




The way that Universal Life typically gets described makes it sound very much like Whole Life insurance. The reality is that it's much closer to term insurance. In fact, it is annually renewable term insurance combined with a side fund.
InsuranceExpert
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PostPosted: Wed May 27, 2009 12:42 am   Post subject: insurance  

A "side fund?" What is that? Is it the same premium ( or close to it) as Whole Life?

sdchargersfan
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PostPosted: Wed May 27, 2009 4:19 am   Post subject:   

Quote:
A "side fund?" What is that?




Sd, term life plans don't build cash value, whereas the insurance company would generate a fund from the premium paid on the universal plan that would keep the policy active even after premiums stops coming. I think IE referred to that as 'side fund'.
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Jeremy Holter

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PostPosted: Wed May 27, 2009 9:36 am   Post subject: insurance  

Ok...I get it. Well.........thanks for the clarification. I've been reading up on 'Whole', 'Term', Universal, etc. Sometimes ALL of it can get confusing.

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sdchargersfan

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PostPosted: Wed May 27, 2009 10:03 am   Post subject:   

Term insurance is temporary insurance. It lasts for a specific period of time.



Whole life insurance lasts for your whole life.



Term insurance is similar to paying rent. It is an expense.

Whole life insurance is like buying a house. It is an asset.

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PostPosted: Wed May 27, 2009 10:16 am   Post subject:   

Universal Life (UL) is fancy annually renewable term insurance (ART). ART is nothing more than term insurance that increases in price as one gets older.



Ex. Joe is 30. He is buying a $100,000 UL policy. For this example, we'll ignore any costs other than the Cost of Insurance (COI). Joe is paying $500/year. As he gets older, the COI per $1,000 gets more expensive.



Age 30 COI: $100 ($400 goes into the "side" fund)

Age 31 CIO: $110 ($390 goes into the "side" fund)

Age 32 COI: $125 ($375 goes into the "side" fund)

.

.

.

Age 40 COI: $500 (Nothing goes into the side fund)

Age 41 COI: $550 ($50 comes out of the side fund)



The "premium" is flexible because all that matters is enough money goes into the policy to pay for the COI and other expenses.



They type of UL policy will determine what is done with the side fund.



The major problem with UL policies are the fact that they are ART policies, but are sold as a permanent insurance solutions. ART policies are designed for temporary insurance needs and not permanent ones. The increasing cost of insurance combined with human nature (the desire to pay less instead of more premiums) cause these policies to fall apart for people who live past life expectancy.

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PostPosted: Thu May 28, 2009 12:36 am   Post subject: insurance  

Quote:
cause these policies to fall apart for people who live past life expectancy.
Yep,..I can see how THAT would happen. Sounds like a person would not have any kind of 'back-up' plan when they got older.
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sdchargersfan

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PostPosted: Thu May 28, 2009 11:24 am   Post subject:   

Hi Shirley,



Welcome to the forums!



Quote:
can insusarance company take mone form cash value or universal life insurance policy to pay premeium without consent from insured?


I think everything is properly mentioned in your policy clauses. Did you go through your paper works?



Steven
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steven

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PostPosted: Fri May 29, 2009 11:07 am   Post subject: insurance  

I've been talking to my local Insurarance Agent ( a place where I have my Auto Insurance, too) and talking to him about Universal Life and 'regular' Life......'Whole' Life. He sure explained it pretty well. I think, with the 'coverage' of what I want, etc. I think 'Whole' Life would benefit me more than having Universal.

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sdchargersfan

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PostPosted: Fri May 29, 2009 12:09 pm   Post subject:   

Whole life also costs 2-3x more than than UL...

dgoldenz
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