Mom to Mom

[LilacTree]

Over 20 years ago I bought a whole life insurance policy with my four children as beneficiaries. This was not a term policy, it was supposed to last until I died.

After I turned 75 (I am now 79) the policy "changed" to some kind of market-based policy and now I have to pay three times the amount of my previous premium payment, plus the "cost of maintaining my account" increased due to my age.

Every year I now get a "lapse" notification for a set amount (about $1500 lump sum) in order to keep the policy in force.  That is on top of my premium payment which is very high now.

I fought this right up to the NJ State Insurance Commission and lost.  The insurance company insisted this was how the policy was always set up.  It wasn't, but I wasn't able to prove it.  I moved so many times, I could not find the original paperwork. The insurance company won.

I thought about letting it lapse, but I had put so much money into it, and I still want my children to receive the insurance benefits when I die.  I have no other estate, no other assets.  This is all they will ever get.

My kids have so far helped me pay this additional lump sum every year since this started.  Today I was advised by the insurance company that in order to stop this yearly threat of lapse from happening, I will have to again increase my monthly premium payment by several hundred dollars.  And they can't guarantee that it will not go up again anyway, because it's "market-based."  I do not control this, they do.

My question is would it be wrong of me to ask my children to help with these higher premium payments? 

[Mominohio]

I'm no expert, but you have to consider the face amount of the policy and if all these premiums are worth it.

Could you cash it in and take some amount out and put that back for your final expenses, or pay up most of your final expenses now, so that they will be covered.

If your children are adults, they don't need a life insurance amount from you. If you will not be leaving someone dependent on you (a spouse or a special needs child or a minor child), I would consider getting what money you can out of this and eliminating it. 

I see no need to pay out the nose just to leave some money to adult kids who can provide for themselves. Make sure you have money for your final expenses and let this go.

[2blonde]

Wow, that is an awful mess, Lilac.  I agree with Mominohio that you should see if you can cash it in and get whatever you can out of it now.  Surely it would be more than enough to cover your final expenses. 

[LilacTree]

@2blonde@Mominohio

That's the rip.  There is no money in my account.  That's why I now have to "replenish" it every year.  There's nothing to "cash in."  Unless I die, it's worth nothing.

Thank you for your advice.  I have to weigh this every year.  Hopefully not for long.

[GenXmuse]

I guess you could give them the choice of paying extra every year to collect the insurance or not pay every year but forgo the inheritance and see which they prefer. 

[Carmie]

My DH had one of these tern insurance policies that went up when he was 50.  Term policies are not lifetime policies, they are usually good for about 10-20 years, then they have to be renewed with new terms.

Because my children were not little any more, the insurance was not needed, so we cancelled it.

life insurance is not needed when you have adult children. It is needed if the children are young as a way to take care of them.  There is no reason to leave adults money,  As long as your final expenses can be paid, you will be okay without it.

[LilacTree]

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@Carmie wrote:

My DH had one of these tern insurance policies that went up when he was 50.  Term policies are not lifetime policies, they are usually good for about 10-20 years, then they have to be renewed with new terms.

Because my children were not little any more, the insurance was not needed, so we cancelled it.

life insurance is not needed when you have adult children. It is needed if the children are young as a way to take care of them.  There is no reason to leave adults money,  As long as your final expenses can be paid, you will be okay without it.

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@Carmie

That's not exactly true anymore.  Who knows what's going to be "gone" by then?  Social Security?  Medicare?  Any kind of health insurance at all?  What will doctors and hospitals be charging in 2027?  What will meds cost?  And most definitely Medicaid will be gone.

They all went to college, graduated with honors, have good paying jobs . . . NOW.  Who knows what will be available to them in ten years?  I certainly don't.

Sorry for the rant, certainly not meant for anyone's post.  I just think of these things and it worries me what kind of world they will have, and my grandchildren.

[LilacTree]

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@Bonanzajellybean wrote:

I guess you could give them the choice of paying extra every year to collect the insurance or not pay every year but forgo the inheritance and see which they prefer. 

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@GenXmuse

Since we have been through this every year since I turned 75, I know what their answer would be.  It's me who can't accept it.

Anyway, thank you all for your opinions.  They do, of course, make sense.

[alicedee]

If it were me, I would sit down with my children and explain the situation and ask what they want done...if they want the insurance settlement, they will need to help with the cost.  I wouldn't make a decision based on the money you have put into it....you purchased life insurance coverage with that money and fortunately didn't need to use it. 

Personally, I would drop the policy and put aside half the amount I was paying each month and put it aside for final expenses.  

[henderson]

Have you checked into term insurance?  I'd fine a good insurance agent to discuss this with.