Confused About Life Insurance Policy in My Name

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lilblu
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Confused About Life Insurance Policy in My Name

Post by lilblu »

My grandparents died 5+ years ago and I just found out they had taken a life insurance policy out in my name 30+ years ago for $5,000. I was just given the paper work as well as a letter from 2014 stating that the company had changed it's name.

What the heck am I supposed to do with this life insurance policy? I thought the person(s) who took it out collected the money if I die, not the other way around. My dad is telling me that I can collect that money because my grandparents are dead. Wouldn't their POA get the money if I die? I am so confused. :?
AlphaLess
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Re: Confused About Life Insurance Policy in My Name

Post by AlphaLess »

Well, with life insurance these are the key actors:
- owner: the person who owns the policy,
- insured: the person whose life is insured,
- beneficiary: the person(s) to whom money goes when there is an event (i.e., death).

You need to look at the policy who the actors are.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
Topic Author
lilblu
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Re: Confused About Life Insurance Policy in My Name

Post by lilblu »

Thanks, good point.

So looking at these aging and smelly documents, it appears that my grandmother was the primary owner and beneficiary and my mother is listed as contingent owner and beneficiary. Since my grandma is dead, does that mean if I die that my mother gets the money?

Another thing is that this is called a "20 Pay Life." It lists all these values up until 20-21 years of age, then stops, except that it also lists ages 59-65. It lists "cash surrender or loan value" which is around $2,800 at ages 59-60 then climbs up to around $3,100 at ages 64-65. It also lists "paid up insurance" to age 20-21 then stops, with the maximum value at $5,000. I don't know what any of that is. It might as well be written in Swahili.
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Stinky
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Re: Confused About Life Insurance Policy in My Name

Post by Stinky »

lilblu wrote: Thu Sep 17, 2020 11:11 pm Thanks, good point.

So looking at these aging and smelly documents, it appears that my grandmother was the primary owner and beneficiary and my mother is listed as contingent owner and beneficiary. Since my grandma is dead, does that mean if I die that my mother gets the money?

Another thing is that this is called a "20 Pay Life." It lists all these values up until 20-21 years of age, then stops, except that it also lists ages 59-65. It lists "cash surrender or loan value" which is around $2,800 at ages 59-60 then climbs up to around $3,100 at ages 64-65. It also lists "paid up insurance" to age 20-21 then stops, with the maximum value at $5,000. I don't know what any of that is. It might as well be written in Swahili.
From what you've posted so far, here is what you have -

--- You said in original post that the policy was taken out 30+ years ago. If your grandparents kept up with all premium payments (that is, paid for the full 20-year period implied by the title "20 Pay Life"), and if they didn't already surrender the policy (that is unlikely), then the policy is still in force. No future premium payments are required.

--- If your mother was the contingent owner and beneficiary when the policy was taken out, and the primary owner died, then your mother became the new primary owner and beneficiary. That means that she would get the death benefit when you die. You might want to talk with her about making you the new contingent owner of the policy.

--- $5,000 is a pretty trivial amount of life insurance. The policy could be surrendered now, and the insurance company would pay out a cash surrender value, probably somewhere in the range of $2,000-$2,500, to the owner (that is, your mother). If the policy were surrendered, there would be no death benefit when you die.

--- The owner (that is, your mother) can get in touch with the insurance company to see what all of the options are.

OP, you may have more questions. Please post back if any of this isn't clear. (During my working years, I worked for the home office of a life insurance company, so I have some experience here.)
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bob60014
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Re: Confused About Life Insurance Policy in My Name

Post by bob60014 »

My parents did the exact same with me, similar type plan too. I knew this ownership/insured/beneficiary setup wasn't their intent, so about 10 years ago I wanted to sort it out, making me the insured and owner. My policy was with Allstate, and IIRC when I contacted them, they sent a form indicating the change and within a few weeks it was transferred to me. Sorry, I don't recall if my mom was required to sign off on it. Luckily she was still alive at the time so it wouldn't have been a problem. About 2 years after being in my name I decided to cash it out and received about $2000.
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lilblu
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Re: Confused About Life Insurance Policy in My Name

Post by lilblu »

Thanks everyone! I appreciate the help. :happy

I have a few more questions. As of 2014, all mail related to this policy was going to my grandma's address. My grandma died in 2015, but her youngest son (her POA) still lives at that address.

Once my grandma died, would the fact that her son had POA play any part in this life insurance policy?

What do you think would be involved in getting all the mail directed to my mom's address? Basically, we don't want to have any contact with my uncle about this policy at all. He's a lying snake. My mom had completely forgotten about the whole thing, she still doesn't really remember it. It's been 5 years since Grandma died and this uncle never notified us about the policy. My other uncle (they're brothers) showed up at my parents' house with the life insurance policy after he forced his brother to give it to him. It makes me wonder why he was keeping it. I'm wondering if he did something so he could get his hands on that money.
123
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Re: Confused About Life Insurance Policy in My Name

Post by 123 »

Due to the complex family dynamics involved perhaps your best approach would be to contact the life insurance company and, as the individual insured by the policy, ask them who the current owner of the policy is according to their records. You will then have a better idea how to proceed.

Some policies issued by some insurance companies have an option where a child insured by the policy will automatically become the owner of a policy at (typically) age 21 if that's what the original purchaser of the policy wanted.

Many times insurance companies will update the actual paper policy document with any changes if it is returned to them with the request for the change. However a policy can still be changed generally even if the original policy document is not returned. So while the original paper policy document you have may be a good indicator of the current status of the policy you cannot be certain without contacting the insurance company directly.
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Stinky
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Re: Confused About Life Insurance Policy in My Name

Post by Stinky »

It is my understanding that a POA expires when the person granting it passes away. So your uncle (?) shouldn’t have been able to use the POA to do anything with the policy.

I agree with getting in touch with the insurance company. They might talk to you as the insured. But they should talk to your mother, especially once she establishes herself as the new owner of the policy after she gives the insurance company a copy of your grandmas death certificate.

The insurance company can tell your mother the status of the policy.
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Jablean
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Re: Confused About Life Insurance Policy in My Name

Post by Jablean »

My mother had one for $3000 I think purchased for her by her mother in the 1940s through Royal Neighbor but they could have done it in the 60s after I was born too. I was the beneficiary not the estate and she knew that it was in effect telling me to use it for funeral expenses, which is what we did. She had another $20,000 paid up policy thru her retired from work place. This gave me cash flow to handle executor duties (taking care of a semi-dependent and house) as we couldn't find and get her will approved and access to her cash which was part of the estate for four months. So while neither policy was for a very large dollar amount they were helpful because they had a quick turn around just requiring a death certificate and my id.
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lilblu
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Re: Confused About Life Insurance Policy in My Name

Post by lilblu »

Thanks for the help.

I didn't want to start a new thread for the following questions:

A life insurance policy for my father turned up dating back to the early 1950s. There is no owner listed but the beneficiary is his father who died many years ago. Who would likely be the owner of that policy now? I read that ownership typically goes back to the estate. I don't know what that means. Does it mean the executor (my uncle) owns it and/or decides what to do with it?

Interestingly, the policy is only for $500. I used an inflation calculator to determine that would be the equivalent of about $5,000 in 2020. What I find really interesting is that these grandparents were really poor prior to about 1968 and they still took out life insurance policies on their children and invested where they could. My maternal grandparents weren't anywhere near that poor, but they never did that. My paternal grandfather was able to get a better job around 1968 and made a point to invest money for all of us grandkids, even those of us that hadn't been born. They were very generous people. I've been told that I'm the only grandchild that never asked them for money. I'm also the only grandchild that never spent any of the money they gave me. All the others spent theirs by the time they were 21. I'm nearly 40 and mine is all here. I've been told that my grandfather was impressed that I never spent my money. I always figured I should save it for when I might truly need it. I never saw the point in spending money on frivolous things.
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Stinky
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Re: Confused About Life Insurance Policy in My Name

Post by Stinky »

lilblu wrote: Wed Sep 23, 2020 11:45 am A life insurance policy for my father turned up dating back to the early 1950s. There is no owner listed but the beneficiary is his father who died many years ago. Who would likely be the owner of that policy now? I read that ownership typically goes back to the estate. I don't know what that means. Does it mean the executor (my uncle) owns it and/or decides what to do with it?
I'd call the insurance company to see whether the policy is still in force. If it is in force, they can tell you more about ownership, current beneficiary, etc.

Is your father still alive?
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clip651
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Re: Confused About Life Insurance Policy in My Name

Post by clip651 »

lilblu wrote: Wed Sep 23, 2020 11:45 am Thanks for the help.

I didn't want to start a new thread for the following questions:

A life insurance policy for my father turned up dating back to the early 1950s. There is no owner listed but the beneficiary is his father who died many years ago. Who would likely be the owner of that policy now? I read that ownership typically goes back to the estate. I don't know what that means. Does it mean the executor (my uncle) owns it and/or decides what to do with it?
If your father is still alive, I would think he could start by contacting the insurance company since he is the insured.

If you don't get the answers you need from the insurance company, and if your father is deceased, you could also try the unclaimed property websites for the state where your family live, and/or where they possible owners of the policy lived, and/or where the insurance company is located.
SuzBanyan
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Re: Confused About Life Insurance Policy in My Name

Post by SuzBanyan »

Lilblu: I agree your Dad should call the insurance company.

My Mom recently passed away. My Dad showed me a policy on her life a few weeks before she passed. It was purchased by my grandmother in 1951 for a face value of $1000, with a current death benefit of about $4800. My parents married in 1953 and made a $20 payment on the policy every year until my Mom turned 85 in 2018, when it became paid in full. When my Mom passed, my Dad was advised that my grandmother was the owner and beneficiary and that since my grandmother had already passed, my mother was the contingent owner and beneficiary. The policy was thus payable to the Estate of my Mom.

Best of luck to your Dad.
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