Life Insurance Troubles
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Life Insurance: Choosing the Right Kind
I just want to start off by saying I’m not trying to sell insurance, I’m not an agent and I only know about life insurance from my recent research. This hub is meant to be informative and helpful. I don’t want this happening to you or a love one.
Understanding life insurance and what kinds are available is a must before you decide to buy. Unfortunately, not everyone understands or takes the time to look thoroughly into it. When you buy life insurance, you want a policy that fits your needs without costing too much.
The first step is to decide how much you need, how much you can afford to pay, and the kind of policy you want. Then you should do some homework; find out what various companies charge for that kind of policy you want. Shop around for a good life insurance agent or company that will be able and willing to help you with your questions.
The Internet or HubPages have extensive information on this subject. Take the time to read and understand this info. Don’t be afraid to ask friends or family members if you don’t understand something and know there are people out there to help.
When choosing the amount of life insurance you need, figure how much cash and income your dependents would need if you were to die. Your policy should come as close to what your dependents would have if you were to die now and what they would actually need.
When my father passed away he left my mother widowed at the age of 62 and young by today’s standard. Within the next couple of months, my mom decided to take out life insurance, something she felt was appropriate. On the suggestion of a friend she consulted an insurance and investment agent. I don’t know how she decided on what type of policy because neither my brother or myself knew she was doing this. I’m sure monthly or quarterly payments had something to do with her decision.
My mom got married young and never was a person who did much research on anything because she had a husband who took care of the essential things in their marriage. In my opinion purchasing life insurance was a good and smart investment my mother made.
But the problem is that once my mom took out her policy she never revisited her insurance agent or her policy. She kept paying the premiums without questioning anything. Wrong, wrong move…..Since my brother and I knew nothing about this, we weren’t able to assist her until now and frankly, its to late.
The scenario is this: 25 years ago she purchased a Whole Life Insurance policy, her premiums were affordable, she then received a letter from her agent that the policy had been sold to another insurance company and the policy was now a Universal Life Insurance. She still did nothing, thinking that the premiums will remain the same and they did. So, no questions were asked.
Then three years ago her premiums went up slightly, no big deal because the policy was still affordable. In 2010 the letters started to arriving. ‘Grace Period Notice’....informing her that her life insurance policy was in danger of terminating due to the outstanding loan balance. Send in triple the amount of her premiums and everything will be fine.
Several more letters arrived asking for more money and now her quarterly premiums have tripled from the original amount. We, my brother and I, have contacted the agent handling her policy and he basely informed us that there is nothing we can do but let the policy lapse and coverage will terminate. The insurance company can’t reduce the premiums to make this more affordable and terminating this policy now would be crazy.
We asked about a cash value and we are told there is none. ZERO!! I was told by the insurance company the cash value was used against the low premiums to make up the difference on the policy loan leaving nothing left.
So, now what??? There is no way we are canceling this policy and losing all the money my Mom has paid into it. Please don’t let this happen to you or a love one. Make sure you know what your payments are going to be and get all the pertinent information before you decide to purchase life insurance. Don’t think because you are young that 30 years from now all will be the terrific and payments will remain the same. it’s a crock….
My Mom is now on a fixed income and the last thing she needs is to have something triple in payment. We are stuck and frankly, if they triple again we will be in a world of hurt.
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Ken...thanks so much for all the advice. I don't think we can do much with this policy except to keep paying, if not we will lose all the money she has paid into it. We will have the policy money when the time comes. The problem is the premiums payments are outrageous, especially on a fixed income. Bummer..all away around. Thanks again for your comment. :)
- Types of Life Insurance Policies
Types of life insurance policies. Comprehensive detailed information about the different life insurance types that are available.
Ken Barton 13 months ago
I'm sorry your Mom has run into trouble with her life insurance. We were fortunate when my Mom passed away that her insurance was enough to cover her burial with a couple thousand left over. Today, her policy wouldn't have been enough. Most funerals if you're not cremated, run a little over $7,000.00, so it's good to have a policy that will cover that much. However, if someone was to invest the amount a premium usually runs into some IRA or Money Market account, you do better in the long run than having the insurance policy.
I had a policy that was suppose to make money and even pay for itself in 5 years time, but when I found out it didn't work that way I went right in and canceled the policy right out. They gave me the cash value back which amounted to just over $800.00. Then I went to the gentleman I had my vehicle insurance with and he set me up with exactly what I needed. He is an old friend of the family and someone I knew I could trust. I should have gone to him in the first place, but I went where my parents had gone and that was a mistake.
Continuing to pay on a policy that is worthless now is throwing good money after bad. She would be better off putting what she can into a Joint Savings Account or Money Market Fund. That way she can slowly build up the account to a level that will cover her funeral bill. She could even prearrange things with the funeral home and be paying directly on her bill ahead of time, so come that day, everything is already handled. Whatever direction you take I'm sure you and your Mother will make good choices. Have a great week.