Anyone have any life insurance policy knowledge?

[HCI]

So my wife and I have had a life insurance policy for over 2 years with ING. Today I received a letter in the mail that her policy had been canceled due to non payment on Dec 20. I immediately logged onto my bank account website and pulled up were the last payment had been made and accepted on Dec 7th. It is due every 20th of the month and we have it set up through our bill pay from our checking account on the 7th of each month and its been that way for well over a year without any problem. I called them, waited on hold for over 30 mins which is ridiculous for and insurance company IMHO. I explained the situation and the CSR told me he could see were the payments had been made and accepted but never applied to the account and since there is a 60 day grace period its been like that for 3 months!!! So for the past 3 months they have accepted the payment, cashed the check, but have not applied the monies to the account. Then of course this guy cannot help and his supervisor cannot help, he has to call another department and guess my luck, he cannot get them on the phone. So he has to put in a request for an audit on the account and see why the money was not applied, and of course its going to take 5-7 days.

Now here is what concerns me. The policy states if it is ever canceled due to non payment it cannot be reinstated without reapplication which would be a headache since it was not our fault and could it not make another policy higher because of this? Also the company never contacted us by phone or mail that the policy was in lapse, is this not somehow illegal to not apply the money to the account and not let the policy holder know its in danger of lapsing?

 

[Eva Greczkowski]

If they don't resolve this to your satisifaction quickly, I'm sure these people can get their attention. Mississippi Insurance Department

Good Luck.

 

[navychop]

And very good suggestion. Hopefully the MS people will be very pro-active.

A long shot could be to get your Congressional rep or senator to send out a query on federal letterhead.

 

[HCI]

I read our policy today and the only mention that they will not accept premium payments is this

"The company does not accept premium payments or loan repayments using money orders for amounts over $5000 and may reject payments made by cashier's checks, bank drafts, and treasurer's checks."

It makes no mention of not accepting payments from normal checking account checks, which basically what this is.

I am going to give them a call again tomorrow if I do not hear from them and if they do not resolve it I will contact the MS insurance dept.

 

[Ira Lacher]

I agree: Contact your state's insurance department.

Even if you get satisfaction, you might want to consider enrolling in a group plan, if one is available at your or your spouse's workplace or from a union, professional or trade organization. Group rates generally are lower than individual rates. Frequently, depending on eligibility, you can enroll without supplying an extensive health history or submitting to a medical exam.

 

[HCI]

My group plan at work is about 20 bucks per month more than what I pay now. Plus it would get put under the cafeteria plan then would be taxed more "I think" if I died.

 

[Ira Lacher]

Really. For the same type of insurance? Or do they offer a "whole life" or "universal life" product where you can contriibute to a tax-free cash accumulation fund? That does carry a higher premium, but you also have the advantage of a savings account that probably returns a much higher interest rate than a savings account, CD or money market.

 

[TheForce]

Life Insurance benefits are not taxable. The only exception I know of is an annuity which has special tax treatment but is paid out like a life insurance policy.

Prize Goddess beat me to it so contact them to get them in the loop. Most likely your audit, when they get to it will have everything resolved anyway. It sounds like a clerical error. BUT, you have to do your do diligence and get it resolved. In the meantime, continue to make those payments to prevent the policy from canceling for real.

Ira Lacher- The only type of insurance is Level term, most would agree, except insurance salesman, that whole life and Universal life have no investment advantages. Buy insurance for protection. Invest in real investments for growth and income. Stocks, bonds, 401k, IRA Roths, and REITS inside an IRA as examples.

 

[Ira Lacher]

whole life and Universal life have no investment advantages.

That used to be true when you could count on a 5% interest rate from a CD or a savings bank. But since the economic meltdown, and the concurrent meltdown of interest rates, that's no longer true. The rules have changed. Whole life and universal life policies are returning a guaranteed 4%. Contrast that with current CD rates. The highest I've seen is 1.86%. Plus, the interest on CDs is taxable. Interest on many u-life plans is not. Before making a final decision, consult an insurance professional about it.

 

[navychop]

Yes. But also remember that agent makes his or her money by selling policies.

 

[Ira Lacher]

Of course. But the agent also is probably selling an off-the-rack policy from one company. A workplace policy is usually custom-designed by a broker to appeal most to the demographics of that workplace. This includes benefit levels and premiums, as well as additional aspects of the policy. Also, the broker may have enough wherewithal in the marketplace to have thoroughly scouted the multitude of companies for the insurer that provides a group policy with the best fit for that workplace. They also may have special enrollment periods where you can forgo any health histories at all, if you qualify.

Unfortunately, insurance is not cut and dried. But group policies generally will give you the most value for your money.