by TJ88 » Thu Aug 09, 2012 02:15 am
My step mother, age 74, smoker, has been in a nursing home for 4 years. She has always refused a mammogram but recently an aid noticed blood on her undergarment support and upon further investigation found her breast to be discolored and deformed. She was sent to an oncologist who then discovered a huge mass on her breast and diagnosed her with breast cancer. The scan showed that it has begun spreading into her bones. According to the oncologist, her life expectancy is approximately 2 years. I don't think there is any insurance available for her except for guaranteed issue whole life, which does not require medical exams or the answering of health questions. The kicker is that it would not pay the full benefit amount if death occured during the first two years. Within two years it would pay all the paid premiums back plus ten percent. After two years it would pay the full benefit amount. I have found some websites where you can obtain quotes online from some reputable(?) companies such as Mutual of Omaha, Gerberlife, AAA Insurance, AARP, and Colonial Penn. The best rate for a $25,000 policy was $171/month or $2052/year (Mutual of Omaha). Even if she lives another 10 years there would be $20,520 invested. If I were to go through an agent I may or may not find a better deal. If one buys directly through the insurance company I would think this is the best bet. Is this a legit and worth while product to purchase?
Posted: Thu Aug 09, 2012 02:59 am Post Subject:
First, you do not benefit from buying direct. Insurance premiums are regulated by state insurance filings and cannot be reduced (in fact someone will have to be licensed to take the business).
at 75, she's pretty much at the end of the timeline for guaranteed issue products. So if someone is willing to issue you should probably act on that.
Even if you just get the return of premium. I challenge you to find somewhere else that you will earn 10% guaranteed.
It's remiss to categorically states one way or the other since I know so little about you and the situation. But I'm thinking you have a lot of reason to think you should do this.
Posted: Thu Aug 09, 2012 02:19 pm Post Subject:
AARP/New York Life actually offers a 25% return on paid premiums within 2 years. But, their maximum benefit is only $15,000 with a higher premium per $1000 than MoO. Most GIWL plans will take people between 75- 80 years old while MoO GIWL will issue policies to those up to 85. Since my step mom has absolutely no assets, the reason for this policy is for burial expenses.
Posted: Thu Aug 09, 2012 03:49 pm Post Subject:
All companies listed in my previous post offer the 10% interest. AARP/New York Life actually offers a 25% return on paid premiums within 2 years. But, their maximum benefit is only $15,000 with a higher premium per $1000 than MoO. Most GIWL plans will take people between 75- 80 years old while MoO GIWL will issue policies to those up to 85. Since my step mom has absolutely no assets, the reason for this policy is for burial expenses.
Posted: Thu Aug 09, 2012 08:55 pm Post Subject:
Be very much aware that many, but not all, GI policies reduce the amount of death benefit payable in the first two years. Some policies do this by up to 50% in Year 1 and by 25% to 50% in Year 2. Only after the end of Year 2, if the insured has not yet died, will the full death benefit be paid in those policies after the death has occurred..
Posted: Thu Aug 09, 2012 09:17 pm Post Subject:
Be very much aware that many, but not all, GI policies reduce the amount of death benefit payable in the first two years. Some policies do this by up to 50% in Year 1 and by 25% to 50% in Year 2. Only after the end of Year 2, if the insured has not yet died, will the full death benefit be paid in those policies after the death has occurred..
Max, if they do that, that is much better for the OP than getting their premiums + interest returned.
Posted: Thu Aug 09, 2012 10:57 pm Post Subject:
Yes, I'm sure you're right about that. But that's not really the issue.
It doesn't help the beneficiary if the amount of death benefit won't cover the funeral like someone else thought. The person who buys this stuff without being told (yes, there are agents who don't discuss it, leaving the owner/insured to find for himself in the contract) about the death benefit reduction in the first two years might have been better off with a higher cost policy that doesn't do this.
Of course, all this assumes that the person dies within those first two years. After two years, its a moot point. And the lower cost policy would be the winner.
Posted: Fri Aug 10, 2012 10:06 am Post Subject:
might have been better off with a higher cost policy that doesn't do this.
Do you know of any guaranteed issue policies that don't pay a lower benefit the first two years? I don't.
Posted: Fri Aug 10, 2012 02:45 pm Post Subject:
Do you know of any guaranteed issue policies that don't pay a lower benefit the first two years?
Sure. That junk from Colonial Penn that Alex Trebec advertises on TV. There are others. Their ads emphasize "no reduced benefits in the first two years." What they don't tell you is their premiums are significantly higher than other policies that do reduce the benefits.
It's all a trade-off controlled by the insurance companies. The statistics have to be balanced in one way or another -- higher benefits mean higher premiums.
Plus, the "no reduction in benefits" companies also limit the insurance amount by age. When they advertise "$7.95 per unit", and you look at their rates, the value of a unit does not follow the traditional $1,000. The value of a unit changes with age. Everyone pays $7.95 per unit, but a unit for a 45-year-old is considerably larger than a unit for an 80-year-old.
Call the 800 numbers sometime and request their "free information". The only downside is that you will forever be on their mailing list and you might be able to heat your home in the winter with all the junk mail that follows (if you don't buy their insurance, they sell your name/address to others -- give them an alias, and you'll see what I mean).
Posted: Fri Aug 10, 2012 05:15 pm Post Subject:
Max
This is the claim that Colonial Penn makes:
"You cannot be turned down for this coverage because of
your health. Because there is a two-year limited benefit
period, your acceptance is guaranteed."
In other words, the first two years do not pay a full benefit.
Posted: Fri Aug 10, 2012 06:39 pm Post Subject:
Probably a different policy than the one that gets advertised here.
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