Life insurance--read the fine print !!

[Frenchie's Wife]

My wife was going through my life insurance policies and found something alarming in the fine print. One of my policies states that my insurance payout is reduced by 50 percent when I reach 65 years of age! I had know idea they could do that. Talk about a rock and a hard place, I just turned 64 this month. I have stopped all treatment and trying to enjoy the time I have left. If I am fortunate enough to live another year my wife has to make do with a lot less when I pass. As if I did not have enough on my plate already. The moral of this story: read the fine print!!

[lohidoc]

What an awful, inhumane predicament. I would try to discuss things with your insurance broker (the guy who sold you the insurance) to see if anything can be done. Insurance companies rely on these brokers for their business, so sometimes they have some influence. But that seems unlikely.

Have a tax lawyer look at the policy. Is there something like an insurance ombudsman where you live? Am I right in thinking you live in Canada? Maybe contact your member of parliament, file a human rights complaint?

I know none of this is likely to help. But this is callous and inhumane.

[janklo]

That is actually standard, at least with group insurance. I worked in that area a long time. It always reduces the amount at ages starting with 65, then usually more at 70, 75, etc. it's because of the actuarial tables. The same is true on the other end, for a baby less than 6 months old usually the amount is reduced too. Because of the statistical risk of dying at the very young age or the other end of the spectrum.

[Sophy]

This might not help in your situation but my life insurance pays out in whilst I am still alive if a doctor certifies that I am expected to live less than 12 months. The insurance companies call it early payment on compassionate grounds or something like that and I don't think you have to give it back if you live longer.

Wishing you all the best

[janklo]

That's true, it's usually called 'the living benefit' and you just have to fill out paperwork and they contact your doctors. We were going to use that with our daughter, but the process took about 2 months and we didn't have that much time.

[Jack&KatiesMommy]

That is pretty standard for life insurance....most reduce payout as you age.

[Bev G]

Just FYI for everyone. We were able to get a 75% payout of Steve's policy when our doc certified that she expected him to have 6-12 months to live. They certainly had us jumping through MANY hoops to affirm that prognosis (it was a pretty large policy), but it worked out OK and facilitated our move to VT for him to transfer care to Dartmouth. Now that he has had the stem cell transplant, which may have worked, he likely will survive longer than our Pittsburgh doc's expectation. We will NOT have to pay back the early pay-out (at least I HOPE not) The remaining amount of the insurance will be deleted (wrong word, I know) on October 1, one year after he went on short term disability. I still cannot understand why, and it is a great concern to me, but I guess it is what it is.

[NWgirl]

Wow - I had no idea about any of these things.

[alphagam]

In general, there are two types of life insurance. One is whole life and you can cash it out within certain parameters. The other is Term. Term is usually cheaper when young, but the value goes down as you age. It also can not be "cashed out" ever. We carried "term" on me when our 4 girls were small, as my husband would need the money to pay daycare. Once the girls got older, we dropped it. That's why it's called Term. It's for a period of time, a term. The premiums start going up and the layouts go down beginning at about age 60-65.

[nkoske]

What an awful, inhumane predicament.

Inhumane?? Callous?? No one forces you to buy insurance and when you do you sign on the dotted line saying you agree to the terms. It's your responsibility to read and understand the fine print. Never rely on the guy making the sale to have your best interests at heart (everyday is a good day to buy a car for a car salesman, everyday is a good day to buy a stock for a stock broker, everyday is a good day to buy a house for a realtor(tm), etc...). I'm sure at the time one purchases a life insurance policy you can remove the payment decreases, but that policy is going to cost more money.

In my opinion life insurance is for unexpected death prior to one being financially secure. Since retirement ages are mostly around 65, ideally you're financially secure at that point and then life insurance is no longer necessary. I know many aren't, if not the majority. I know life happens and for some much earlier than others, but we all need to take a little responsibility for ourselves and situations. Relying on others to look after you is a fools errand.

I will say it's good to know about the living benefit. Although for myself I'm pretty much screwed, why. Well because I didn't pull the trigger soon enough on Life insurance. Healthy 34 year olds have plenty of time to get health insurance right? But that's on me. I will say I've made it my mission to get friends and family to pull the trigger sooner rather than later. IMO, you should be getting term life insurance when you're married and buy a house, then maybe another when you have a kid. Big term policies are pretty cheap when you're young and healthy.

Luckily I have a small policy through work (that doesn't require a health screening) that I can take with me if/when I leave (by paying quite a bit of money). I've also heard of cancer survivors being able to get policies after 5 years, expensive ones...but policies none the less.

[CRguy]

The moral of this story: read the fine print!!

I agree 1,000 % my friend.

I am no real friend of InsCo's, because of my own personal experiences.
I have insurances but try to read the fine print !

With what you have posted, others may have hit on the issue :
policies have defined weasel clauses and we need to find them and sort them out.

I have consulted lawyers, insurance brokers and friends in the industry and sometimes you just get caught in the net.

I would still talk to the folks who sold you the policy ( broker or corporate group if it is a work related / HR administered policy ? )
I would try to discuss "compassionate payout" options but keep paying premiums !
Consider asking for InsCo to convert the policy to your wife's benefit / name so she would have her own policy for down the road without them having to pay out now ?
I would also consider an "ombudsman" approach or letter to the Superintendent of Insurance ( Canada or Provincial )
If you want to expend the energy, a media watchdog program ( Marketplace, CBC national - forget who the pitbull is but I like her ?????, local media ??? ) may be in order ?

Other options :
- there are Insurances available for "anyone" with no medical required .. may be an option if you want to top up an amount ?
- there are mortgage and loan insurances available = mortgage the house, use the cash, pay the insurance, insurance pays out on the outstanding mortgage later when you are not here. At current rates the monthly payments could be attractive and funded by the cash from the loan ?????
I WOULD consult a lawyer on this one, but have suggested it to others when they could not pay their medical bills in the USA. We tend not to have that particular problem up here ... BUTT any advantage you can have when dealing with these kinds of considerations .... Use'm.

Be creative and don't accept just 'cos you didn't see the clause originally, that you are stuck and just have to accept it.
Look for options and offer the InsCo a solution and just keep bugging them ... IF that is your style !

Nothing to lose my friend, but that just may be me, and I am a shit disturber sometimes !

Cheers
CRguy

(( still planning the next assault on the RV .... ))