How do i make sure my life insurance pays out?

Question

I likely am fatally ill and have some decisions to make. i had a big life insurance policy through work, but i think i'll need to come up with $700/month to maintain it. it sounds like a lot of money, but even if i survive another decade, which does not seem likely, its worth it to my beneficiaries. i worry that we'll miss a payment and the insurance company will cancel and nobody will get anything. i want my kids to be able to put a down payment on home and education. when i call the insurance co they ask if i have a claim number. i say, well i don't think i'm eligible for a claim, seeing as i'm not dead! i'm worried they'll weasel out of paying one way or another.

Anybody have insight or experience with life insurance claims?

Answer 1

Very sorry to hear about your situation.  I know a few people that were in similar situations essentially better $500-$1000 a month that they will die within a couple years.

Some companies have 'living benefits' on their insurance policies.  IF you can proove that your are terminally ill, they may pay out the money to you and your family.  Some companies also have a "Waiver of Premium" where if you become seriously ill or disabled and can't afford the premiums they will pay them for you.  This may be why they are asking for a claim/policy number.

If paying the premium is an issue of affordability, have you discussed with your kids the possibility of having them help with paying the premiums (if they are old enough and/or working).  If they are the benefiaries and getting the money it would be a good 'return on investment' for them to help chip in if they can.

You're best bet is to contact your agent directly to discuss this or find a third party agent you trust that has no vested interest in whether the policy will pay out or not to give you advice on how this will affect your  and your family and what your options are.

PS: life insurance companies aren't out there to s***w people out of money.  If the policy was set up right and you filled it out honestly it will pay out.  The industry gets a bad rep from people that don't understand the seriousness of the questions asked or the exclusions in a policy and then get claims denied and they blame the insurance company for not paying out.  Not a big deal, people are just affraid of or hate what they don't understand sometimes.

Answer 2

If you stop paying the premium - the policy will lapse and (depending on the type of policy it is) likely will not pay. That's the thing about insurance -- in order to collect - you have to pay for it. As long as you pay the premium on time- you should not have a problem.

Some on this site have talked about selling the policy to a company to get money now. What they are talking about is selling the policy to a viatical settlement company. VERYBAD IDEA!!!  Viatical settlement companies will buy the policy - for pennies on the dollar.

You may want to talk to an estate lawyer. They can advise you on the best way to set up your assets to make probate easier (such as in a trust). You can also pre-pay funeral/burial costs with the funeral home and have things planned out. If your health is that bad, it may be something to consider. One less thing for your family to have to deal with during a very emotional and stressful time.  

Answer 3

You may get screwed if you sell your life insurance policy to another company.   After all if your sure about dying why let someone else benefit and take some or your money away.    They do not want your insurance policy for nothing.  

Yes, they will pay you but they will make money on your policy and that is money your beneficiaries will not get.   Do not do it.

If you have a whole life policy and you miss a payment it would be or could be paid by a loan against the policy.   That is ok.   What kind of policy do you have?

Also, you should set up a living trust so the money goes exactly where you want it to and no one can contest it later.   See an attorney for a living trust.

See your insurance agent about the life insurance.  If is is through your work, they might have an agent you can speak to, if your lucky, or someone in Human Resources should tell you who to speak to.

Don't make any hasty decisions.   See an attorney or financial advisor for help and an insurance agent.   Get advice from more than one.  There are several options to consider.

Answer 4

Why would you be worried they wouldn't pay?  That's what life insurance is for...to pay out upon death.  Have you had a bad experience with this company to warrant such an opinion?

Answer 5

Well, you'll need the POLICY number, to ask them.  If you still are working, ask your HR department.  If you aren't, unless you converted the policy to private coverage, likely it's not in force any more.

The best thing to do, to be sure the policy stays active, is to set up automatic withdrawal from your checking account.