Post: #1

Can some of more seasoned financial guys please chime in?

I know it's kind of morbid to think about profiting from death but it doesn't hurt to think about financial security and the future.

Do any of you guys have policies out on your family? How does it work?

Post: #2

You can take out an insurance policy on a family member as long as that individual is willing to sign the application and can pass the medical exam. It is actually quite common because many sons/daughters will take out insurance on their parents in order to pay for funeral/final expenses.

Post: #3

I've been thinking about taking out a policy on my mom also for $100-$150k. As Lou mentioned, you have to have an "insurable interest" in the person to be able to buy a policy. Buying policies on your parents up to $100k will usually not cause any problems in terms of underwriting and more can be done but you're going to have to show financial proof.

The biggest thing to decide is what type of life insurance that you need. Do you want a term policy, universal policy, whole life policy, etc? Term policies are the cheapest but if the insured doesn't die during the term and you never convert the policy, that money is down the drain. Whole policies don't have an end date on coverage but they're more expensive.

I used to work in insurance/financial services, so PM me if you have any other questions on the process.

Post: #4

So you need the other person to sign the paperwork?

There was a Walmart scandal where they secretly took out policies on older employees and collected the payout after they died.

Post: #5

Yeah you need the individual that you want to take to life insurance on to sign the application. This prevents STOLI, which is stranger owned life insurance. You also need the individual to submit to a medical exam if you are buying insurance as most life products require a medical exam.

Post: #6

Quote:Jane Sims always knew her husband was a valuable employee to Wal-Mart. She just didn't know how valuable. Sims discovered recently that Wal-Mart, the company her husband, Douglas, worked for before he died, had taken out a life insurance policy in his name. When Douglas Sims died in 1998 of a sudden heart attack, Wal-Mart received about $64,000. She got nothing from that policy.
"I never dreamed that they could profit from my husband's death," said Sims, whose husband worked in receiving at Wal-Mart's distribution center in Plainview for 11 years.

Companies routinely take out secret life insurance policies on the lives of their low-level employees and collect thousands of dollars when they die. The families never know the policies are in place and typically receive none of the money.
The policies are called corporate-owned life insurance policies or COLIs for short. But they're better known in the insurance industry as "dead peasant" and "dead janitor" policies.

While many companies buy life insurance on their key officers, so-called "dead peasant" policies are different because the deaths of low-level employees do not affect a company's financial health.

http://www.freerepublic.com/focus/news/666837/posts

Post: #7

That's pretty dark.

Post: #8

(03-14-2013 01:24 PM)Hades Wrote:  That's pretty dark.

It's business nonetheless.

If you look at it objectively without prejudice you'd realize there's nothing wrong with it.

It's not like you're taking the policy and then killing the insured... That is dark.

Post: #9

I never thought about buying life insurance for a family member until I read this thread, but I am now seriously considering it. Here's the deal. My mom is seventy years old. She's athletic and in good shape, but is a pretty heavy drinker. I have a serious family history of premature death, for example three of my four grandparents were dead by the time I was born and my dad passed away quite some time ago. I may be looking to buy a policy for my mom in the amount of one to three million. I would perfer a twenty-year term life insurance policy, if that is possible.

The information which I found on this subject online is surprisingly unhelpful and I therefore have some questions. Does the fact that she is my mother automatically give me an insurable interest? What kind of financial proof would be required for a policy with a value of between one and three million dollars? What is a ballpark figure for what my monthly payments would be for such a policy? How do I go about seeking such a policy? Is there one particular insurer which is better than the others?

Post: #10

Can we take policies out on forum members?

Post: #11

(04-10-2013 04:07 PM)el mechanico Wrote:  Can we take policies out on forum members?

Maybe on the ones we have met personally.

Post: #12

Bump,

Has anyone taken out a policy on anyone? I'd like to take a policy out on my wife and myself for our future children. What is recommended?

Post: #13

My Dad has become much less healthy than a few years ago. He was a long term drug user. I've already asked him to start collecting the ones that don't need any kind of health check. Just send the check monthly, or have it taken out of my account monthly. Some are very low monthly fees but the payout might only be $10,000.

Mostly Im looking in on his health and once I start to see it getting very bad, I will sign up for a couple of these for him.

Anyone have much knowledge about these kinds of plans?

Post: #14

Be careful about it, it's hard to make money out of it.

They will ask your parents/grandparents to fill a Health Questionnaire. Everything they write on the questionnaire has to be 100% accurate. If they make any mistake or if they forget to write something, the insurance could refuse to pay.

Many Insurance employees receive bonus based on how much claims they refuse. So trust me, they will find any reason to deny your claim.

Life insurance is super expensive in the long run, it might be better just to invest the money, especially if your parents/grandparents live for another 20-30 years.

Post: #15

If you do this, stick with term policies. Better places to invest your money elsewhere.