Life Insurance
From wikiSenior
You Bet Your Life
Life insurance used to be fairly simple. It came in two flavors, -
- Term Life, which provided insurance for a set period of years and was often renewable, and
- Whole Life, which worked as a combination insurance and savings account.
While you were young and working, you often could carry both, a larger term policy to protect the family and a smaller whole life policy as enforced savings. Upon retirement, or at age 70, most term policies lapse. The whole life policy, however, usually lasts until age 100. It is often used to pay for the burial and to help a spouse whose other income may be reduced. In most cases, life insurance benefits paid to the spouse are free from probate or additional taxes.
Today, some new wrinkles have appeared that can be especially beneficial to seniors. Like an update of the old game show, You Bet Your Life, some investors are stepping forward to do just that, i.e. bet on your life. If you are sufficiently old, e.g. 74, and sufficiently healthy to be insured, they will provide the funds and pay the premiums for you to purchase a hefty life insurance policy. After the policy is in effect for a year, they will buy the policy from you for as much as a third of its value.
Called "Spin Life", these policies are a part of the Life Settlement sub-industry, were investors buy current policies from people that need to cash out. The difference is that the investors are paying all of the premiums.
A senior in New York adds, "the policies that investors are purchasing on seniors, which I was not for at first, actually became a dream came true. I did not believe a word until someone from the company of spin life insurance explained to me how this works, and there is no risk." . . .
Now, there is risk, Big Time Risk! In this current economic climate, the insurance companies have become more demanding and the investors have fled. This leaves the seniors in the middle with big time policies and loans they cannot afford. As recently noted in the Chicago Times, it is estimated that as many as 10,000 seniors are in serious trouble. So goes another "too good to be true" scheme.
[edit] Actions:
- Since insurance is regulated by state, investigate what type of policies are available where you live.
- Be wary of any sales pressure tactics or small payments. Check for policies with at least two or three firms.
- Don’t be afraid to ask a friend you trust for further advice.
