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 Posted: Sun Aug 10, 2008 9:55 pm Post subject: Is this legal? |
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| I just discovered my wife has been paying $62 a month on a $3000 life insurance policy for her grandfather for over 10 years. It's not too smart, I know. But, is this legal? |
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spursfan
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| Posted: Sun Aug 10, 2008 11:50 pm Post subject: |
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The insurance company doesn't care who pays the premium.
Nothing illegal about your wife paying the premium even if she's the beneficiary.
The not to smart comment is right on the money or off the money depending on your point of view and 4th grade math.
$62 per month X 12 months = $744 paid per year X 10 years = $7,440 paid in premium for a $3,000 policy is not too smart or should I say,..... Mathematically challenged.
It is probably a Modified Whole Life Policy with a restricted death benefit for the first two years sold on TV by Alex Tribec and Grandpa bought "3 units" for ONLY 68 cents per day per unit and "no agent will call you and its guaranteed issued without any medical questions."
Those type policies give the life insurance industry a black eye, but, on the other hand, nobody is putting a gun to anyone's head forcing them to buy clearly worthless paper.
For those policies to be advantageous for the life insurance buying public they either need to die by accident the day after the policy is issued or die on the first day of the third policy year.
Beyond that your premium paid "in" relative to the death benefit paid "out" is simply not worth it.
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GarySpicuzza
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| Posted: Mon Aug 11, 2008 9:32 am Post subject: |
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As Gary has already explained, it really doesn't matter who pays the premium for the policy.
We often see that the parents pay the premium for the plan taken on their children. Its quite a normal phenomenon. Your wife hasn't done any thing illegal by paying the premium for the plan of her grandfather, who otherwise may not be able to continue with the coverage.
However, the premium amount sounds odd to me. I'd like to agree with Gary on this issue as well.
Regards,
Juanita
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Juanita
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| Posted: Mon Aug 11, 2008 9:50 am Post subject: |
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| Quote: | | Those type policies give the life insurance industry a black eye, but, on the other hand, nobody is putting a gun to anyone's head forcing them to buy clearly worthless paper. |
Agreed, but isn't that the reason that we rely upon the insurance agents to guide us towards the right direction.
The insurance agents are required to evaluate the applicant's needs and to suggest a solution accordingly.
What the poster is spending for the coverage is absurd.
~Jeremy |
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JeremyHolter
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| Posted: Mon Aug 11, 2008 10:17 am Post subject: |
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Jeremy Holter wrote:
| Quote: | | but isn't that the reason that we rely upon the insurance agents to guide us towards the right direction. |
 [sarcasm]Yes, but only in theory. Alex Tribec on TV assured you NO AGENT WILL CALL YOU. It's best you figure it out on your own that paying 68 cents per day per unit makes that policy the most expensive form of life insurance on the market.[/sarcasm]
An agent would point out the folly in the premium vs benefit ratio and direct a client to a suitable alternative and earn his/her commission in the process. Mr. Tribec touting the fact NO AGENT WILL CALL YOU allows the insurance company to legally rob you by having you screw yourself.
Remember, the insured either needs to die by accident the day after the policy is issued or die on the first day of the third policy year.
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GarySpicuzza
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| Posted: Mon Aug 11, 2008 10:18 am Post subject: |
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I think the OP just left off a zero or two... 
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Lori
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| Posted: Mon Aug 11, 2008 1:21 pm Post subject: |
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Lori,
A friend of mine just last week dropped off a "Modified Benefit Whole Life Policy" - "Limited Death Benefit During First Two Policy Years" - for me to analyze.
Mom was 51 years old when she bought the policy from Alex on TV.
Premium $15.90 per month for a $3,692 death benefit BEGINNING the 1st day of the 3rd year.
Cash value after 20 years....$1,276
Premium paid after 20 years....$3,816
She bought two (2) "units" of Life Insurance.
Cash value at age 100.......$3,692
Death benefit at age 100....$3,692
Premium paid to age 100....$9,349
[Humor]
But on the bright side.....NO AGENT WILL CALL YOU!
Answer clue: The insurance company legally robs you by having you screw yourself.
Question: What's a "Modified Benefit Whole Life Policy" sold by your host on TV and endorsed by AARP?
[/Humor]
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GarySpicuzza
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| Posted: Tue Aug 12, 2008 12:16 am Post subject: |
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I find it so hard to believe that ANYONE would purchase such a thing...I guess if you can't do third grade math maybe?  these types of policys should be illegal.
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Lori
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| Posted: Tue Aug 12, 2008 5:00 am Post subject: |
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Wow, I think I'll just stick to the infomercials about the Magic Bullet, Ron Popeils amazing rotisserie and knife set, and those lovely Debbie Meyer green bags. I haven't personally seen Mr. Jeopardy selling, or attempting to sell, anything. I bet he got paid a million dollars to do the commercial, and because he's on there everyone just picks up and dials because they trust the celebrity on the screen. What a shame. spurs.fan, I hope you have read the wonderful advice on this thread and told your wife to cancel the policy immediately. Oh and just my personal opinion, boo Spurs! 
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TheInsuranceFiles
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| Posted: Tue Aug 12, 2008 9:56 am Post subject: |
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But just how expensive is $15.90 per month for a $3,692 death benefit?
Now the comparision below is unfair because you can't compare term life insurance with cash value life insurance and definitely NOT against Modified Benefit Whole Life that's guaranteed issued. But just looking at how much money the insurance company has at risk vs premium paid should be an eye opener if you can qualify medically.
A female age 51 non-smoker (worst rates) could buy a $100,000 - 10 year level term policy for $21.79 per month. The prefrerred plus rates (best rates) are $14.79 per month.
And now you know why A. L. Williams back in the day was soooooo hissed off!
But keep in mind the client in my example did this to herself.
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GarySpicuzza
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| Posted: Tue Aug 12, 2008 10:19 am Post subject: |
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Hi there,
Even I'd agree with you when all you have to say is-
| Quote: | | It's not too smart, I know. |
Certainly not too smart..but I'm sure Lori would scream at me when I add saying "all wives are made up of the same soft mud.."
May be it is the same case with you..it could well be the case that your wife is the only beneficiary & she is more concerned to maintain this policy keeping in mind the reduced chances of obtaining another coverage for her grandfather with his current age & health conditions. It is not the question if the laws allow her to pay for it or not...the real decider is whether she is going with her conscience or not...if required you may need to sit & explain today's realities to her. All the very best! ArindamSenIndies |
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ArindamSenIndies
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| Posted: Tue Aug 12, 2008 10:22 am Post subject: |
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| Quote: | | I'm sure Lori would scream at me when I add saying "all wives are made up of the same soft mud.." |
You got that right! Are you kidding me, Arindam ? Do you have a wife? What does that mean that all wives are dumb? 
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Lori
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| Posted: Tue Aug 12, 2008 5:07 pm Post subject: |
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What?
What's that?
Did I read what I thought I read? 
Did he say? "all wives are made up of the same soft mud.."
Take this... ...and may your auntie's sister wash your mouth out with soap.
How 'bout you and Lori go for a little swim?
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Gary Spicuzza, *SAFE
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GarySpicuzza
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| Posted: Tue Aug 12, 2008 8:33 pm Post subject: |
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| Quote: | | Did he say? "all wives are made up of the same soft mud.." |
Had to re-read it myself about six time! 
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"Never, never be afraid to do what's right, especially if the well being of a person or animal is at stake. Society's punishments are small compared to the wounds we inflict on our soul when we look the other way." Martin Luther King Jr. |
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Lori
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| Posted: Wed Aug 13, 2008 9:53 am Post subject: |
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BTTT:
| Quote: | | I find it so hard to believe that ANYONE would purchase such a thing... |
These policies are purchased by persons who are UN-insurable and/or UN-educated.
$15.90 per month for a $3,692 death benefit doesn't sound or seem like a lot of money to the insured person since they don't have anything to compare it against.....except maybe the term life commercials.
If they die by "accident" during the first two years the company pays the full $3,692. If they die by some disease process during the first two years the company's liability is limited to refunding the premium paid plus interest.
Which is why I stated above:
For those policies to be advantageous for the life insurance buying public they either need to die by accident the day after the policy is issued or die on the first day of the third policy year.
| Quote: | | these types of policys should be illegal. |
Hmmmmmm, no.
The insured is wanting a life insurance company to issue a policy WITHOUT submitting any evidence of insurability.
Common sense should tell you that is going to be the very most expensive life insurance policy on the market that you sold yourself.
| Quote: | | I guess if you can't do third grade math maybe? |
Exactly.
I don't think they start teaching the multiplication tables until 4th grade.
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GarySpicuzza
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