Is Underwriting Being Picky for No Reason, or is this a Legitimate Issue?

[LifeWorth]

Scenario: 57 year old woman is insured for $300,000 dollars. 30 year level term. She has a $300,000 mortgage. Woman's 82 year old mother takes policy out on her because if something happens to the woman, chances are the person in charge of the debt would be the woman's 27 year old daughter, since the woman's mother will be too old or probably dead. Woman's mother is the payor, woman's daughter is the owner. So:

woman - insured
woman's mother - payor
woman's daughter - owner

Underwriting is making this an issue and asking all sorts of questions because the owner is the daughter, and the payor is the grandmother. I don't get it. So what? What's the problem here?

 

[VolAgent]

I'm willing to bet you never bothered to explain all this to underwriting in a nice, easy to read letter/email.

Without knowing why, I can certainly see them asking what is going on. Why does a 57 year old woman with a $300,00 mortgage need her 82 year old mother paying the premium?? Why is the woman's daughter the owner? Why isn't she just the beneficiary? Unless you explain it all, they are going to ask.

And really, why is the daughter the owner? I can understand her being the beneficiary, but why is she the owner? This woman can buy a house with a $300,000 mortgage, but she can't be troubled to pay for and manage her own life insurance???

 

[LifeWorth]

The daughter is the owner and the beneficiary. The daughter currently doesnt have the funds to make payments, so the grandmother is the payor for the first year.

The woman that has the mortgage...well, she doesnt pay the mortgage, the woman's mother (the grandmother) pays the mortgage. Is it starting to click now? I see how it's confusing now, but geez, I didnt understand it would be this big of a deal.

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by the way Vol, Im a new agent and love your posts. They have helped me a lot. I have been browsing the forum since august. Thank you

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And the granddaughter is the owner because if something happens to the grandmother, then we wont need to worry about a successor owner. Since chances are the granddaughter will outlive the grandmother, we made her the owner from the very beginning. We feel the insured, the mother, might cancel or not make payments if she were either the payor or the owner.

 

[VolAgent]

The daughter is the owner and the beneficiary. The daughter currently doesnt have the funds to make payments, so the grandmother is the payor for the first year.

The woman that has the mortgage...well, she doesnt pay the mortgage, the woman's mother (the grandmother) pays the mortgage. Is it starting to click now? I see how it's confusing now, but geez, I didnt understand it would be this big of a deal.

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by the way Vol, Im a new agent and love your posts. They have helped me a lot. I have been browsing the forum since august. Thank you

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And the granddaughter is the owner because if something happens to the grandmother, then we wont need to worry about a successor owner. Since chances are the granddaughter will outlive the grandmother, we made her the owner from the very beginning. We feel the insured, the mother, might cancel or not make payments if she were either the payor or the owner.

If I'm confused, just think how the underwriter who has to sign off on it feels.

Write it all out in a nice letter, give the underwriter a reason to say yes. Although, I still question why a woman has a $300,000 mortgage that she can't pay for and is apparently incapable of managing her affairs.

 

[senior-advisor-indiana]

What does the lady need life insurance for? Does the daughter want the house if she dies?

 

[Jerard]

This thread is making me want to start drinking again.

 

[VolAgent]

This thread is making me want to start drinking again.

I thought you were old enough to have learned it is best not to stop.

 

[moonlightandmargaritas]

She has a $300,000 mortgage. Woman's 82 year old mother takes policy out on her because if something happens to the woman, chances are the person in charge of the debt would be the woman's 27 year old daughter, since the woman's mother will be too old or probably dead.

What does "in charge of the debt" mean?

Here's what the underwriter wonders: what statute would make the 27 year old woman be responsible for the mother's debt? Three party life insurance contracts are a BIG no-no.

 

[LifeWorth]

What does the lady need life insurance for? Does the daughter want the house if she dies?

Yes, the house will go to the daughter.

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What does "in charge of the debt" mean?

Here's what the underwriter wonders: what statute would make the 27 year old woman be responsible for the mother's debt? Three party life insurance contracts are a BIG no-no.

The daughter would be owning the house and in charge of paying the mortgage, and final expenses for the mom.

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If I'm confused, just think how the underwriter who has to sign off on it feels.

Write it all out in a nice letter, give the underwriter a reason to say yes. Although, I still question why a woman has a $300,000 mortgage that she can't pay for and is apparently incapable of managing her affairs.

So just write an email to the underwriter explaining all of this? Alright. Thank you.

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of course, this was all done this way as suggested by my boss. If only I worked with people as knowledgeable as you guys. I mean this sincerely and legitimately, not being sarcastic. You guys know more than some freaking managers I've encountered.

 

[VolAgent]

So just write an email to the underwriter explaining all of this? Alright. Thank you.

Yes, but don't assume they will necessarily agree with you.

This just raises so many questions and unfortunately you didn't get out in front if it.

It would help if the 27 year old lived in the house, even better if the 84 year old did as well. Otherwise they can just walk away from the house and mortgage at the woman's passing.