# Life Insurance



## QuickSilver

14 years ago, after my husband died, I converted a term life policy on myself to a whole life.   It's not a huge policy, but certainly enough to cover my burial expenses. (which is all I intended it to do)...  This week I decided to check up on the policy to make sure all was in order.   While it is a whole life policy, it's a different kind.   When I reach 85 years of age, I no longer have to pay premiums.  If I die between now and 100 years of age, it will pay out it's full value.   If I happen to reach age 100... it will send ME the full amount of the policy death benefit.   Ever hear of this?   

Here's my concern.  Suppose I DO reach age 100 and I'm in a nursing facility.  That pay out will become part of my assets and the nursing home can take it... right?   Then when I DO die.. my kids will have no insurance money to bury me.   Am I looking at this correctly?   Should I change the policy to make it a traditional payout of death benefits?  Never heard of this and certainly don't remember agreeing to it.. but it was just 2 months after my husband died and I don't remember much of that time.


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## Don M.

It sounds like you would be well advised to discuss this with an agent from your insurance company.  They should be able to tailor your policy to meet your wishes.


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## Lethe200

I assume you have a full copy of the new contract you signed. If not, obtain it from the insurer. There's a lot of WL variants these days since Universal Life and Variable Universal Life came on the scene. And in the future, don't buy ANYTHING unless you do understand all the 'ins and outs'.

The easiest fix to this would be if the beneficiary is assignable. If it is, then a simple change from paying you to paying your heirs, will suffice; an insurance policy is POD (payable on death) and not part of your estate/assets if assigned elsewhere. I would be very surprised if the beneficiary designation is not assignable, to be honest. It's possible it is not; but unless the policy was purchased by an irrevocable trust, as owner you are normally allowed to designate anyone you want to inherit.

If you have any questions, take the contract to your estate attorney, or if you don't have, contact Legal Aid or your state bar to find a referral. A good tax adviser might be able to do it as well. My personal preference is for a fiduciary financial adviser, but most people don't have one. You want someone to read the contract through and explain what it means. 

I personally would NOT call the insurer to get an explanation. Customer svc reps are among the lowest paid employees and most of them have outsourced to call centers. Insurance agents and brokers are salespeople and they are often unfamiliar with the "fine point legalese" of a specific policy. That is like depending on what a RE agent says about describing a house they're selling to you, as legally binding. It isn't and you can't - or rather, you could but it's not advisable.


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## QuickSilver

Lethe200 said:


> I assume you have a full copy of the new contract you signed. If not, obtain it from the insurer. There's a lot of WL variants these days since Universal Life and Variable Universal Life came on the scene. And in the future, don't buy ANYTHING unless you do understand all the 'ins and outs'.
> 
> The easiest fix to this would be if the beneficiary is assignable. If it is, then a simple change from paying you to paying your heirs, will suffice; an insurance policy is POD (payable on death) and not part of your estate/assets if assigned elsewhere. I would be very surprised if the beneficiary designation is not assignable, to be honest. It's possible it is not; but unless the policy was purchased by an irrevocable trust, as owner you are normally allowed to designate anyone you want to inherit.
> 
> If you have any questions, take the contract to your estate attorney, or if you don't have, contact Legal Aid or your state bar to find a referral. A good tax adviser might be able to do it as well. My personal preference is for a fiduciary financial adviser, but most people don't have one. You want someone to read the contract through and explain what it means.
> 
> I personally would NOT call the insurer to get an explanation. Customer svc reps are among the lowest paid employees and most of them have outsourced to call centers. Insurance agents and brokers are salespeople and they are often unfamiliar with the "fine point legalese" of a specific policy. That is like depending on what a RE agent says about describing a house they're selling to you, as legally binding. It isn't and you can't - or rather, you could but it's not advisable.



Thanks for your response... It's STILL a whole life policy... and that's the main concern.  IF... I make it to 100, I get the money... IF I don't make it... my beneficiaries get the money..   Not a really big deal.. I apparently chose to make it that way, but I don't remember..  I was just wondering why this option is offered...


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## Lon

QuickSilver said:


> Thanks for your response... It's STILL a whole life policy... and that's the main concern.  IF... I make it to 100, I get the money... IF I don't make it... my beneficiaries get the money..   Not a really big deal.. I apparently chose to make it that way, but I don't remember..  I was just wondering why this option is offered...



What you have is a Life Paid Up At 85 Whole Life Type Policy. Life Insurance is typically free of any creditor claims and as long as you have named beneficiaries no one other than the named beneficiaries can receive the death benefit irrespective of when you die.


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## QuickSilver

Lon said:


> What you have is a Life Paid Up At 85 Whole Life Type Policy. Life Insurance is typically free of any creditor claims and as long as you have named beneficiaries no one other than the named beneficiaries can receive the death benefit irrespective of when you die.



Thanks Lon...  Yes..  my husband is my primary beneficiary with my sons as secondary.  I still don't know why I opted to take the money at age 100..  maybe I figured I'd need to go on a nice vacation by that time..  lol!!


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## AZ Jim

100?  You are more optimistic than I, dear girl.  Good for you.


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## imp

Life insurance is largely a fraud. To back up this statement, in case you disagree up front, consider that the Insurance Companies use something called a "mortality table" to predict future deaths. Onto those data, they add a "fudge" factor, to cover statistical anomalies. In theory, if a lot of folks contribute moneys into a pot, that pot to be distributed to beneficieries of the dead, with a bit of gravy syphoned off for administrative costs, the concept is highly recommendable. Unfortunately, that ain't how it works. First, up until the late '60s or so, when Federal legislation changed it, the Insurance Companies were still using the Mortality Tables of 1878 to predict future deaths. What do you think the life expectancy was in 1878, vs. 1960? 

Second, the "Agent" first tries to sell a "20-payment life", or an "Endowment Policy", both producing maximum commission for him. Do you know that each and every payment you make to such a policy gives a "cut" to the original seller? If unsuccessful, a "Whole Life" policy is suggested. The only alternative after that, is the MOST BENEFICIAL policy to the buyer, the "Term Policy". For years, many refused to even sell term coverage. In fact, the Federal insurance law changes <MANDATED  that a cash-value be associated with term policies, if surrendered. 

A book written in the '30s, loaned to me by a kind co-worker when I first married, clued me in. It was, "Life Insurance: A Legalized Racket". Try to find a copy.   imp


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## QuickSilver

I would agree....  But with the caveat that it depends WHAT you are expecting a policy do to.  Are you looking to provide for a family if you die early?  Term is the best..   BUT if like me, you maintain a small whole life policy $20K simply to provide for final expenses, then I believe its a smart thing to have.  Your beneficiary will not have to worry how he/she is going to pay for your burial... which as you know can be well over $10 or $15K..    No need to get all analytic about that..


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## Don M.

Life insurance, in many ways, is like auto insurance....a waste of money, unless you have an accident.  When we were younger, and my job was the sole source of our family income, I carried a Term Life policy...in case something happened to me and we still had the kids at home, etc.  However, as the years passed, the mortgage was paid off, and the kids grew up, I let the policy lapse.  At that age, the premiums weren't much, so I just wrote that money off.  Now, we have a decent retirement "cushion", and we have money set aside for our funeral expenses, so I see no need to pay for Life Insurance.


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## Lon

imp said:


> Life insurance is largely a fraud. To back up this statement, in case you disagree up front, consider that the Insurance Companies use something called a "mortality table" to predict future deaths. Onto those data, they add a "fudge" factor, to cover statistical anomalies. In theory, if a lot of folks contribute moneys into a pot, that pot to be distributed to beneficieries of the dead, with a bit of gravy syphoned off for administrative costs, the concept is highly recommendable. Unfortunately, that ain't how it works. First, up until the late '60s or so, when Federal legislation changed it, the Insurance Companies were still using the Mortality Tables of 1878 to predict future deaths. What do you think the life expectancy was in 1878, vs. 1960?
> 
> Second, the "Agent" first tries to sell a "20-payment life", or an "Endowment Policy", both producing maximum commission for him. Do you know that each and every payment you make to such a policy gives a "cut" to the original seller? If unsuccessful, a "Whole Life" policy is suggested. The only alternative after that, is the MOST BENEFICIAL policy to the buyer, the "Term Policy". For years, many refused to even sell term coverage. In fact, the Federal insurance law changes <MANDATED  that a cash-value be associated with term policies, if surrendered.
> 
> A book written in the '30s, loaned to me by a kind co-worker when I first married, clued me in. It was, "Life Insurance: A Legalized Racket". Try to find a copy.   imp



One thing you can't deny, irrespective of your critique of Life Insurance is that if a insured dies the insurance company will pay the death benefit.

I


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## QuickSilver

Don M. said:


> Life insurance, in many ways, is like auto insurance....a waste of money, unless you have an accident.  When we were younger, and my job was the sole source of our family income, I carried a Term Life policy...in case something happened to me and we still had the kids at home, etc.  However, as the years passed, the mortgage was paid off, and the kids grew up, I let the policy lapse.  At that age, the premiums weren't much, so I just wrote that money off.  Now, we have a decent retirement "cushion", and we have money set aside for our funeral expenses, so I see no need to pay for Life Insurance.



I agree. I wouldn't buy it now..  My policy if very old.


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## imp

QuickSilver said:


> I would agree....  But with the caveat that it depends WHAT you are expecting a policy do to.  Are you looking to provide for a family if you die early?  Term is the best..   BUT if like me, you maintain a small whole life policy $20K simply to provide for final expenses, then I believe its a smart thing to have.  Your beneficiary will not have to worry how he/she is going to pay for your burial... which as you know can be well over $10 or $15K..    No need to get all analytic about that..



The main idea put forth by the book I mentioned was, that the _theory_ of life insurance is that many contribute a small amount into a general "pot"; the contributions are based on a prediction of how many in the group will die during the next 12 months, the total payout in death benefits is thus predicted, and the Company, allowing for inaccurate statistics and administrative costs, tacks on a "fudge" factor. All well and good, _for a certain grouping of folks. _That group consists of the young adults NEEDING death protection, to cover a family's needs, should the breadwinner die. Thus, after we are aged, families are grown, and a death will represent mainly a personal loss rather than a monetary one, the aged do not NEED life insurance any longer. 

So goes the theory, and I agree with it. However, insurance companies will always disagree, their business is to make money by getting everyone to gamble on their continuing existence!    imp


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## imp

*"One thing you can't deny, irrespective of your critique of Life Insurance is that if a insured dies the insurance company will pay the death benefit."

*True, but only if all the stipulations put forth in the policy are met. See, to me, a death is a death. Almost without exception, suicide is a benefit-exclusion. Thus the person who, say, submits to an assisted suicide, will have benefit denied. This may actually be in the process of changing, I suppose, but undoubtedly will increase the cost of life insurance. 

Say a guy drives his car into a bridge abutment. Accident? Co. will try it's damnedest to deny payment, claiming suicide. Another commonly misunderstood coverage is AD & D -   Accidental Death & Dismemberment. Most such policies pay 50% for loss of one hand and one foot, for example. Imagine the likelihood of such an accident? Or, 50% for accidental loss of vision in one eye, 100% for loss in both. It can happen, but huge court cases have been fought over whether an accident occurred or not.     imp


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## QuickSilver

imp said:


> *"One thing you can't deny, irrespective of your critique of Life Insurance is that if a insured dies the insurance company will pay the death benefit."
> 
> *True, but only if all the stipulations put forth in the policy are met. See, to me, a death is a death. Almost without exception, suicide is a benefit-exclusion. Thus the person who, say, submits to an assisted suicide, will have benefit denied. This may actually be in the process of changing, I suppose, but undoubtedly will increase the cost of life insurance.
> 
> Say a guy drives his car into a bridge abutment. Accident? Co. will try it's damnedest to deny payment, claiming suicide. Another commonly misunderstood coverage is AD & D -   Accidental Death & Dismemberment. Most such policies pay 50% for loss of one hand and one foot, for example. Imagine the likelihood of such an accident? Or, 50% for accidental loss of vision in one eye, 100% for loss in both. It can happen, but huge court cases have been fought over whether an accident occurred or not.     imp



Yep... Ya really gotta be dead... lol!!  What have  you got against life insurance..   I have a $20K policy... I die... my kids have money to bury me..   Why do you want to make it more complicated than that?


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## LogicsHere

May be did not opt to take the money at age 100, in all probability that is part of the original contract.  My mother's is like that as well and in fact I actually fought with the insurance company as it was a $5000 policy and she had already put in $10,000 and if she died all she'd get was $5000 plus she had to continue to pay for it until died which meant she would have contributed $15000 for a $5000 policy.  By chance I had inadvertently gotten the Chairman of the Board involved in the conflict and he saw to it that they not only stopped having to pay the premiums but also raised the policy value to the $10,000 she had paid in and made it a part of the policy.


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## imp

Ma'am, it 'twarn't I who made it complicated, but rather the money-mongering entities which administrate a process which ought to be simple, in application, but is not, in reality.    imp


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