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Message
Life Insurance Question
Posted on 5/11/20 at 8:04 pm
Posted on 5/11/20 at 8:04 pm
I'm stumped on what I can do and wanted to ask the MT experts what they think the next step should be.
I received a call at COB on Thursday from an agent wishing to sell me more life insurance. I was unfamiliar with the company and the agency was based about 40 miles from where I grew up. I was informed that there was a policy on me in which a premium had been paid since I was a child.
The benefactor and policy owner is an estranged family member in which no one in my immediate family has had contact with in years. I asked and no one was aware of this policy.
Now, it was only $25,000 - but I'm still uncomfortable with the fact because to this family member, $25k is a jackpot. I do not feel that my life is in danger or anything, but the premiums are still being paid monthly.
Its a whole life policy - cash value is about $8000. Terrible product, I know, but I did not know about it until Thursday evening. I was able to get in contact with the company's customer service today, which informed me that only estranged family member can cancel or collect on the policy.
Do I have any recourse to get this off of me? I am okay with the person taking the full cash value - I just do not want a policy on me that I do not have control of.
I received a call at COB on Thursday from an agent wishing to sell me more life insurance. I was unfamiliar with the company and the agency was based about 40 miles from where I grew up. I was informed that there was a policy on me in which a premium had been paid since I was a child.
The benefactor and policy owner is an estranged family member in which no one in my immediate family has had contact with in years. I asked and no one was aware of this policy.
Now, it was only $25,000 - but I'm still uncomfortable with the fact because to this family member, $25k is a jackpot. I do not feel that my life is in danger or anything, but the premiums are still being paid monthly.
Its a whole life policy - cash value is about $8000. Terrible product, I know, but I did not know about it until Thursday evening. I was able to get in contact with the company's customer service today, which informed me that only estranged family member can cancel or collect on the policy.
Do I have any recourse to get this off of me? I am okay with the person taking the full cash value - I just do not want a policy on me that I do not have control of.
4
Posted on 5/11/20 at 8:12 pm to anc
I am pretty sure the person whose life is insured has to sign the policy or be a fiduciary of the insured (parent of child buying burial insurance). If you did not sign then it was a forgery and the company you called is crazy for writing a policy on you if they have no information about you, e.g., the ability to run a medical records search to make sure you were not terminal when they issued the policy. Unless you owe him/her money or co-signed a loan I am not sure he/she has an insurable interest in you.
This post was edited on 5/11/20 at 8:16 pm
Posted on 5/11/20 at 8:26 pm to go ta hell ole miss
What my mother believes happened is this person offered to purchase this product as a gift when I was 2 years old in 1979. They probably had permission at that point in time.
The funny part of all this is so crazy kid with one year of community college thought he hit the big time when he landed a whole life sales position. He's just calling old policy holders cold and tracked me down.
Is that my argument? This person does not have an insurable interest in me?
The funny part of all this is so crazy kid with one year of community college thought he hit the big time when he landed a whole life sales position. He's just calling old policy holders cold and tracked me down.
Is that my argument? This person does not have an insurable interest in me?
This post was edited on 5/11/20 at 8:28 pm
Posted on 5/11/20 at 10:43 pm to anc
quote:
What my mother believes happened is this person offered to purchase this product as a gift when I was 2 years old in 1979. They probably had permission at that point in time.
If that’s what happened you have no recourse.
You can call the estranged family member and offer to assume the policy from them if you would like, but they’re the policy owner and have been paying the premiums so it’s there’s to do as they please.
Posted on 5/11/20 at 11:53 pm to anc
Contact the insurance company, but not a salesman, tell the facts as you have stated here with the addition that the policy holder had no insurance interest in you, and the policy was likely obtained fraudulently. If that gets nowhere, contact the fraud department of your state’s insurance regulatory agency.
Posted on 5/12/20 at 7:00 am to Slickback
quote:
You can call the estranged family member and offer to assume the policy from them if you would like, but they’re the policy owner and have been paying the premiums so it’s there’s to do as they please.
This is what I am going to do. I will offer to takeover the policy and its premium payment. This seems like the best course of action.
Posted on 5/12/20 at 7:21 am to anc
I’m really surprised this company reached out to you given that you’re not the owner. That seems like that’s a breach of confidentiality on their part.
Either way, insurable Interest only has to exist on a life insurance product when the policy is written, not thereafter.
I seriously doubt the owner is going to just give the policy to you at this point but you can offer to buy it from him.
Either way, insurable Interest only has to exist on a life insurance product when the policy is written, not thereafter.
I seriously doubt the owner is going to just give the policy to you at this point but you can offer to buy it from him.
Posted on 5/12/20 at 8:04 am to anc
quote:
Its a whole life policy - cash value is about $8000. Terrible product, I know,
Apparently it's not.
You know guys and gals, many of you have your thoughts and opinions on everything financial, and that's they are: opinions. Never assume.
quote:
Do I have any recourse to get this off of me?
No. It's not yours. You don't own it. And it's terrible so why would you want it.
You could offer to buy the policy from the owner. Not considered a recourse.
Posted on 5/12/20 at 9:48 am to anc
You are assuming nefarious intent, probably because the family member is estranged... but there is like a 5% chance that maybe this guy is paying the policy just to provide something to your family when you pass?
Before I get too worked up, perhaps reach out to the estranged family member and just explain how they called you. And just kind of see what they say.
The whole concept of insurable interest is meant to prevent me from taking out a policy on Betty White. If the policy was purchased when you were very young, at those amounts, likely no medical information was needed.
A long, LONG time ago, I had a life insurance license. I seem to recall that an insured only had the right to know a policy was issued on their life, not much other information.
Before I get too worked up, perhaps reach out to the estranged family member and just explain how they called you. And just kind of see what they say.
The whole concept of insurable interest is meant to prevent me from taking out a policy on Betty White. If the policy was purchased when you were very young, at those amounts, likely no medical information was needed.
A long, LONG time ago, I had a life insurance license. I seem to recall that an insured only had the right to know a policy was issued on their life, not much other information.
Posted on 5/12/20 at 11:16 am to LSUFanHouston
quote:
You are assuming nefarious intent, probably because the family member is estranged... but there is like a 5% chance that maybe this guy is paying the policy just to provide something to your family when you pass?
No. I believe the latter at the time. I'm just not comfortable with someone having a life insurance policy on me and being able to collect that is not my wife or child now that I am a grown adult.
I reached out to said family member this morning. I explained everything and said that we had two options:
(1) She can cancel the policy and collect the cash value immediately.
(2) She can sign over ownership of the policy to me and I will take up the premium and change the beneficiaries to my wife/children.
Her and I aren't estranged - its her and my parents, so she wanted to small talk more than talk about this, but I let her know that I was uncomfortable with this policy and felt that one of those two options was best.
Posted on 5/12/20 at 11:34 am to anc
quote:
that we had two options:
That's great and all, but there is a 3rd option. She can do whatever the frick she wants with the policy because she's the policy owner.
Posted on 5/12/20 at 11:43 am to BigErn
quote:
That's great and all, but there is a 3rd option. She can do whatever the frick she wants with the policy because she's the policy owner.
I understand that as well.
Am I wrong that I don't like the fact that someone I haven't seen in 25 years is a beneficiary on a life insurance policy?
Posted on 5/12/20 at 12:21 pm to anc
quote:
(2) She can sign over ownership of the policy to me and I will take up the premium and change the beneficiaries to my wife/children.
So, you demanded that someone hand over to you $8k? Lol
Posted on 5/12/20 at 12:27 pm to anc
If she hasn't killed you yet, she probably won't.
Posted on 5/12/20 at 1:14 pm to anc
Another option - what if she changed the beneficiary to your wife? She can then continue to own and pay the policy. This is assuming that the policy was really created for your and your family's benefit.
25K is a "put me in the ground" policy. I have 50K in term on each of my kids that, god forbid if something were to ever happen to them, will ensure there is plenty of cash to pay for a funeral, any related end of life medical expenses, and maybe establish a small scholarship in their honor.
If that were the purpose of the policy she bought on you years ago, she shouldn't have much issue with changing the beneficiary to your wife. If something happens with you and your wife, she can always change it to someone else.
25K is a "put me in the ground" policy. I have 50K in term on each of my kids that, god forbid if something were to ever happen to them, will ensure there is plenty of cash to pay for a funeral, any related end of life medical expenses, and maybe establish a small scholarship in their honor.
If that were the purpose of the policy she bought on you years ago, she shouldn't have much issue with changing the beneficiary to your wife. If something happens with you and your wife, she can always change it to someone else.
Posted on 5/12/20 at 1:22 pm to LSUFanHouston
That would be considered a taxable gift upon receipt of the death benefit if you had a different owner, insured, and beneficiary.
Posted on 5/12/20 at 2:37 pm to Shepherd88
quote:
That would be considered a taxable gift upon receipt of the death benefit if you had a different owner, insured, and beneficiary.
Correct, it is taxable gift from owner to beneficiary at the time of death of the insured, in the amount of the death benefit.
It's $25,000... so if beneficiary were changed to OP's wife, and OP dies in 5 years, then OP's relative made a $25,000 taxable gift to the wife. OP's relative uses whatever gift annual exclusion is in play at the time (at least 15K, likely, since it's 15K this year) and files a gift tax return to use 10K of her 11 million plus lifetime exemption.
If OP's relative is expected to use her entire 11 million plus lifetime exemption before OP dies, or upon OP relative's death, they can always set up an agreement that OP's wife will reimburse OP's relative for the amount of gift tax ultimately paid.
If this were a multi-million death benefit, I'd have a lot more reservations of course... but this situation would likely have not occured if benefit was that high...
This post was edited on 5/12/20 at 2:38 pm
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