C3 Financial Partners

My Mother-in-Law’s Policy “Died” Before She Did

Todd’s mother-in-law’s policy “died” before she did. Don’t let this happen to you or your clients.

Please watch this video and contact us if we can be of help.

Video Transcription

My mother-in-law is 98 years old. That’s the good news. The bad news is that her life insurance policy died when she was 95. And by that, I mean the contract provision did not allow it to go beyond that age when she bought the policy; and yes, she bought it from me. The contract assumed everybody would be dead at age 95; and, therefore, there were no provisions to extend it beyond that time.

Read the full video transcription

The second thing the insurance companies assumed was that interest rates would be in the double digits.

Obviously, those two things have changed dramatically.

While you can now buy policies that go out to age 120, the interest rates are in single digits (as low as 3%); so even though someone may have purchased a policy after my mother-in-law’s contract, and it goes out to 110 or 120, chances are, if the policy hasn’t been reviewed in a while, the interest assumptions have not been met. Therefore, it’s really important to go back, review those contracts, have a third party review them, and make sure the contracts are going to stay in force so they do what they’re intended to do.

Whether you have a client that has a policy like that, or if you have an individual policy that hasn’t been reviewed in a while, we strongly recommend that you do it. Not just for interest rates, but we also find that insurance companies often have the wrong beneficiary designations recorded. And there are other factors that go into the review. The important thing is that you get it reviewed.

We talk about life insurance being the largest unmanaged asset in a client’s portfolio. They tend, or you tend, to think about the premium you pay or the cash value, but not in terms of the death benefit. So, please take time.

If we can help provide additional clarity, confidence, and coordination, we would be glad to do that.

Thank you

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