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Let’s talk about some of those confusing insurance policies

Dear Mary: I read your column all the time and can’t thank you enough for all the helpful money-saving hints you print.

My mom bought 20-year term life insurance policies for my two sons when they were young in the 1970s. I know she finished paying on them, and I know she didn’t cash them out. When my kids were in their late 20s, Mom told me she was going to give the policies to them so they could put whatever beneficiary they wanted on them. After she passed away, I found that neither of my sons even knew these policies existed. Now what do I do? — Judith, email

Dear Judith: This is confusing. You say she bought 20-year term life insurance policies. The nature of term insurance is that it provides coverage for a period of time, in this case 20 years. As long as your mother paid the premiums, the insurance was in effect. After 20 years (sometime in the 1990s), the insured (your sons) could either drop the policy or pay annually increasing premiums to continue the coverage. It sounds like they didn’t continue the coverage.

Term insurance, unlike whole life, has no cash value. How term insurance works is simple: If the insured dies during the term and the policy premiums are current, the beneficiary receives the face value on the policy as a death benefit. Once the term is up, if the policy is not renewed, it’s over.

For readers considering life insurance on kids, consider that Judith’s mother would have been wise to put those insurance premiums into a savings account, instead. In the unlikely event that one of the boys would have died in childhood, the money would have been there to cover costs of burial. More likely, the boys would have a nest egg when they reached adulthood.

Dear Mary: My husband and I want to thank you. We got your “Debt-Proof Living” book many years ago, and worked to get out of debt and fund our Contingency Fund. The only debt we have is our home. We only have one credit card, and we pay the balance in full. Our Contingency Fund is fully funded and even has extra money in it. We recently learned that my husband will be laid off soon. He has begun looking for another job, and we are cutting everything we can. I work full time in a local government job. You helped us prepare for this, and we are very grateful. — Doris and Elliot, Virginia

Dear Doris and Elliot: I am sorry to hear you will be facing unemployment soon, but thrilled to know that you are well prepared. I truly believe that God uses financial challenges to bring clarity to our minds on what really matters in life. Thanks for your kind words.

To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.

Comments

QualityTermLife 1 year, 8 months ago

There may be the occasional need to insure children, but I think the exception proves the rule that it isn't necessary in the vast majority of cases. Kids simply don't die, nor does anyone depend on them financially.

Actually, the greatest threat to kids is all of the parents in America today who don't have the life insurance they should have. If you are a family breadwinner with little savings, you need life insurance to cover essentials for your family such as income replacement, mortgage protection, college funding, final/burial expenses.

Life insurance is as cheap now as it has ever been. To find the lowest cost policy, use a free search engine like the one at QualityTermLife to compare prices from top rated companies.

If you need it and you don't have it. Get it today.

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