by heartland954 » Tue Feb 26, 2013 12:36 am
Divorced in 2001, ordered to pay maintenance for 12 years. Also ordered to transfer ownership of our universal life policy over to wife, and continue paying premium, in the event that I would pass before the 12 year period. I do not have access to any policy information, even though I continue to pay premiums. For the first time since divorce, I was not able to make my Feb. payment. I contacted ex to inform her, and she made payment so it would not laps. She called to ask for reimbursement, and told me she was having paperwork sent my way. I have been disabled since February of 2008, and she tells me now that the policy has a disability waiver. I have been making premiums under financial duress for 5 years. It has been a financial struggle. I have heard that the funds may be returned, but that they would go to the owner of the policy, and not me. The insurance company will not discuss it with me because I am not the owner, even though I am the one making payments. I am wondering if anyone has any suggestions that could possibly help me.
Posted: Tue Feb 26, 2013 02:49 am Post Subject:
I have heard that the funds may be returned, but that they would go to the owner of the policy, and not me.
That's correct. Getting the money back from the policyowner is a private matter between you and her, and if it came to blows, would be battled in Family Court, since you were complying with that court's lawful order, and that court must interpret your acts of compliance.The insurance company will not discuss it with me because I am not the owner, even though I am the one making payments.
Yes, state and federal privacy laws prevent this.I am wondering if anyone has any suggestions that could possibly help me.
You have to talk to your ex-wife about this, not us. There is nothing wrong with what has taken place so far, other than you couldn't remember having the waiver of disability benefit.Then again, the language of the waiver might talk about the OWNER'S disability, not the insured's, which would also mean that you are not due a refund of any kind, and need to keep paying premiums.
Posted: Tue Feb 26, 2013 07:42 am Post Subject:
Thanks for the quick reply. The odd part about this is that she has a rider policy on her life. When ownership was transferred she took over payments of that portion. A couple years into her paying, she became disabled, filled out the paperwork, and has had her portion covered for her for eight years. If it was based on the owners disability, would it not make the total payments of the entire policy?
Posted: Tue Feb 26, 2013 07:45 am Post Subject:
Thinking about this, the insurance company has told me that if my disability paperwork is accepted, I would no longer have to make payments. Would refunds apply to this ?
Posted: Tue Feb 26, 2013 12:52 pm Post Subject:
A couple of things. First, it is unlikely that she was added to the existing policy with a disability waiver included. Disability waivers must generally be applied for at the time of policy issue and typically only apply to the insured or the policyowner's disability (normally you cannot get the waiver if the owner is not the insured -- but in your case the ownership was transferred, which is why I asked about the language -- a technical reading of that could state the "owner's disability"). Also an insurance company would never accept a partial premium from each of two parties for one policy -- way too much accounting to deal with, and anything that costs the insurance company money is not likely to happen.
So my guess is she applied for her own separate policy. I could be wrong about that, but I don't think so -- I've never seen what you've described happen before. An insurance company can do just about whatever it wants, as long as it doesn't discriminate against someone unlawfully.
As for refunding premiums paid, that is a possibility. The disability waiver applies from the date of disability after a short period of elimination (to make sure the disability is longer term -- usually a waiting period of 6 months). During the elimination period, premiums are payable, but are usually refunded once the waiver takes effect (again, you have to look to the language of the rider to know for sure -- they don't have to refund if it doesn't say so). All premiums paid after the waiver would have taken effect were not payable, so they can be refunded or they can be left in the policy's cash value since UL policies allow you to pay more or less premium than "scheduled". If left in the cash value, a credit would be applied for all the COST OF INSURANCE charges and other expenses which had been deducted in all those months (about 4 years' worth -- could be several thousand dollars), and the account value possibly even refigured to include interest that would have been paid (they should do that) -- you [your ex-wife, actually] may need an independent policy analysis to determine what is owed back to the policy in such a case if they don't make that adjustment.
But, the bad news is, even a premium refund is going to be paid to the policyowner, not the premium payor. So you're still going to have to get your ex-wife to cooperate in getting that money back. Hope you're on speaking terms with her.
Posted: Tue Feb 26, 2013 06:28 pm Post Subject:
Unfortunately we are not on good speaking terms. I guess that in itself is part of the problem. The original policy was for myself, with a rider policy for her. I signed off on ownership, and questioned her shortly after the divorce about the payment structure. She told me I was only paying the premium on my portion of the policy, and that she was paying for the rider policy on her. Unfortunately, I did not review the policy before the transfer of ownership took place, and the payment was split. After about four years she became disabled, and used the disability waiver, so she didn't have to make her premium payments. I was never aware of this until a couple weeks ago. I spoke with the insurance company this morning. I asked them to look into the companies policy regarding refunding on their disability waiver in general. I was told it was not typical for them to issue refunds. I asked that seeing that I was not able to review the policy when I became disabled, would the company be willing to look at this as a non typical situation. I was told that discussing it further would be case specific, and they could not offer me advice. So, I am not sure if the company would possibly consider this. I was not told yes or no. Is this something I could have my lawyer address in court to direct the payments I have made back to me, in the event it is deemed that a refund is applicable. I am still in litigation regarding the maintenance portion of the divorce agreement. I am trying to determine if my lawyer should address this situation in court, or would I just be wasting my time and money ?
Posted: Tue Feb 26, 2013 06:50 pm Post Subject:
I am still in litigation regarding the maintenance portion of the divorce agreement. I am trying to determine if my lawyer should address this situation in court
This would be something to discuss with your attorney. Certainly, I think it would be appropriate for the court to (a) compel your ex-wife to cooperate in obtaining the disability waiver for your coverage that you've paid for, if indeed you qualify, and (b) to disgorge any cash value in the policy that your excess premiums would account for if the insurance company refuses to refund the excess. Your attorney could even subpoena a representative of the insurance company's claims department to testify as to what the company's custom and practice is in cases such as this -- yours is assuredly not the first time this has happened.
The downside to this, which your attorney would know better than I, is that the money you aren't paying as insurance premiums could be shifted to the amount you have to pay as spousal support. But if made a part of her alimony payments, you get the last laugh, because it's tax deductible to you, and taxable to her as income.
In fact, you would be better off shifting all the responsibility for paying the planned premiums to her as alimony and taking the tax deduction for the payments. Here's why:
If your waiver is ever terminated, you will have to pay premiums again. Universal life is heavily dependent on cash accumulation, and while the waiver is in effect, the only cash accumulation results from interest paid by the insurance company on the cash accumulation. They pay the monthly cost of insurance ("COI") and expenses (which could be more than the premium you pay).
If you shift the responsibility for "planned premiums" (not COI -- the language needs to be that specific), she would become responsible for the eventual higher premiums driven by monthly increasing COI that almost always come with a UL policy. The longer the waiver is in effect, if it ever terminates, the more likely this will be. If you want to "get even" with her, this is one of the most insidious ways possible. What the insurance company was planning to stick you with will stick her instead.
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