by KD » Sun Aug 15, 2010 02:55 am
I recently was told that my father had a life insurance policy he intended to go to his six children from his first marriage. His third and last wife told my brother that the policy was cancelled and we would receive nothing. I suspect, if there was a policy, she may have changed the beneficiary to herself shortly before my father died. He was quite ill before he passed. Is there any way we can find out if a policy did exist and do we have an legal rights to contest it?
Posted: Sun Aug 15, 2010 03:04 am Post Subject:
the MIB (medical information bureau) might be able to tell you if a policy existed.
If you think you know the company you can call them. You can most likely get a yes or no with respect to if a policy existed, but you'll get little additional information if you are not owner, insured, or beneficiary.
If a policy existed and she changed it, she would have to be owner to make the change happen herself. Otherwise she would have needed to convince your dad to make the change.
While it's entirely possible a change (if a policy existed at all) was done under duress, but the issue you'll have is proving that such an action took place. This will be extremely tough it not impossible unless you have some amazing smoking gun piece of evidence, and I mean something like a diary entry that explains the entire plot to disinherit the kids and take the money all for herself.
Posted: Tue Aug 17, 2010 11:28 am Post Subject:
Yes website of Medical Information Bureau is the right place for finding such information, though you will be charged a small fee but it is worth it.
Posted: Wed Aug 18, 2010 01:43 am Post Subject:
http://www.mibsolutions.com/lost-life-insurance/
The fee is $75. The published success rate is about 30%.
Posted: Wed Aug 18, 2010 01:22 pm Post Subject:
Life insurance ensures that your family will receive financial support in your absence. Put simply, life insurance provides your family with a sum of money should something happen to you. It protects your family from financial crises.
In addition to serving as a protective cover, life insurance acts as a flexible money-saving scheme, which empowers you to accumulate wealth-to buy a new car, get your children married and even retire comfortably.
Life insurance also triples up as an ideal tax-saving scheme. To know more, read the Key Benefits of Life Insurance.
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Posted: Wed Aug 18, 2010 01:32 pm Post Subject:
30% though it is low but still it seems to be the only solution for such kind of situation.
Posted: Wed Sep 08, 2010 12:56 pm Post Subject:
hi,
yes , you go to website of medical information bureau (MIB) is the right place for finding such information about your policy.
Posted: Thu Sep 09, 2010 05:57 pm Post Subject:
In addition to serving as a protective cover, life insurance acts as a flexible money-saving scheme, which empowers you to accumulate wealth-to buy a new car, get your children married and even retire comfortably.
Don't plan on life insurance as the means to buy a new car, get your children married, or even retire comfortably. It is not designed to do that, and people who try to use it that way usually do no succeed.
If you want a new car, save the money. If you want to "get your children married" and have someone else pay for it, be sure your child falls in love with someone whose parents are phenomenally wealthy. As for retirement . . . save, SAVE, SAVE . . . first in a retirement account, then possibly in some other tax-advantaged vehicle (which could be a life insurance policy or annuity, or in tax-free bonds).
Use life insurance primarily for what it is . . . a DEATH BENEFIT for those you leave behind -- what little might be left after taking the big policy loan -- if you die while driving your new car to your daughter's wedding (that you are paying for) on your first day of retirement. God forbid!
Posted: Sun Sep 12, 2010 03:21 pm Post Subject:
Max,
The IRR on my life insurance policy have been much better than anything offered at the bank. I have immediate access to the cash. I get paid dividends even when I take money out as a loan. My death benefit is even better than my original guaranteed death benefit plus current cash values.
Why is this a bad idea, again?
Posted: Sun Sep 12, 2010 11:02 pm Post Subject:
Life insurance is a great source for needed cash if we are talking about WL and not UL AND, most importantly, the primary purpose of the life insurance is to have a death benefit that never goes away.
It doesn't appear to me that Max is saying that there is a problem with using the cash in an insurance policy just that it shouldn't be the primary way to put money away. I'm often disagreeing with Max, so I need to point out that I'm with him here.
Posted: Mon Sep 13, 2010 01:08 pm Post Subject:
The IRR on my life insurance policy have been much better than anything offered at the bank.
No doubt. With the exception of our inflationary episode in the 1970s-1980s, that would definitely be true of most WL policies, and even most UL policies, especially in the last few years. In today's <1% bank interest rate environment (has been for almost 10 years), whole life insurance's IRR of 5% or so is at least 5-10 times more "profitable".
But compared to saving money in mutual funds or other savings vehicles over the same period, your IRR may or may not be more profitable. Using (WL) life insurance as the specific means to achieving "wealth" is probably not the most efficient route, it could be ahead of or even far behind other possibilities with the same lack of federal guarantees that don't come with life insurance. Mostly it gives control of one's money over to the insurance company. What they can do with it, and what that does for the policyowner may have absolutely no correlation. That's my only objection. (And while I'm no big fan of EIUL, at least the interest crediting rate is not under the direct control of the insurer.)
But as a savings vehicle, I will not argue against the fact that life insurance is a means to the end. Because it works if not tinkered with inappropriately.
So saving money on one's own, or saving by giving control of one's money to an insurance company, I would not dispute either as "saving" money. I just think there may be other, perhaps more beneficial LONG TERM options. That, of course, depends entirely on the person.
I get paid dividends even when I take money out as a loan. . . . Why is this a bad idea?
I didn't say this was a bad idea. But I am also willing to bet that your original intent when obtaining your life policy was NOT to use the money to buy a car or pay for a wedding. These are fall-back options for people who have not saved separately for such contingencies, which is what I try to teach people to do. Most people need BOTH. Using one or the other as the be-all-end-all solution is not a good plan.
And your dividends, if being used to purchase paid up additions, which seems to be your plan, obviously increases your death benefit over time, too. And there's nothing wrong with that, since you paid the insurance company too much money. The dividend is a refund of excess premium (I know, we've argued this point, too, but it is the "textbook" definition that even a CFP learns), so you can have it in cash or use the value to purchase more insurance. Some prefer your option, others just take their refunds in cash or do something else with them, like pay the next year's premium instead of writing a check. Everything balances one way or another.
But using life insurance cash value to do things like buy cars or pay for weddings is definitely is not the INTENDED purpose of life insurance for most people, which is to leave money behind for others when one dies. I've never had anyone say to me, "I'd like to buy a life insurance policy to help cover the cost of my newborn daughter's wedding in about 20 years." Or, "I think I like to buy a new car when I retire, so can I get a life insurance policy for that?"
But some people do not understand that taking money out of their life policy changes the amount that the beneficiary will receive. And many people with UL (which is not your dividend-paying policy) don't realize the danger of borrowing money from that contract, which usually leads to premature policy lapse. Either of those situations is often the result of an agent's original communications with the client, leading them to believe they can touch the money at any time without implication for the future.
Even you should agree that such miscommunication may create an improper perception in the mind of a client.
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