Multiple Term Life and Death Benefit Payouts

[DHK]

Let's get practical and ASSUME for a minute that your course is correct. (It's not, but let's pretend.)

WHO would dictate how much death benefit the insurance company(ies) will pay out?

WHAT would be the criteria?

Unless your course delved into that... it doesn't hold any credibility.

 

[Mrboone2]

Where are you getting this 2.5 million or 1 million figure from?

Two $1 mil policies plus a $500k policy = $2.5 million total insurance.

The $1 million, from what I (mis)remember would be the carriers coordinating to not pay any more than the policy with the largest single benefit amount.

 

[VolAgent]

Let's get practical and ASSUME for a minute that your course is correct. (It's not, but let's pretend.)

WHO would dictate how much death benefit the insurance company(ies) will pay out?

WHAT would be the criteria?

Unless your course delved into that... it doesn't hold any credibility.

My money is on user error, not the course material.

I kept mine. It is very useful, the material was very formal and obviously didn't reflect current practices. But it was always "correct".

 

[Mrboone2]

Let's get practical and ASSUME for a minute that your course is correct. (It's not, but let's pretend.)

WHO would dictate how much death benefit the insurance company(ies) will pay out?

WHAT would be the criteria?

Unless your course delved into that... it doesn't hold any credibility.

So in effect, someone could make $100k/year, have 10 $1 mil term policies and his beneficiaries get $10 mil?

My background on the H side of L&H says that isn't how it's supposed to be, but given that I can't find anywhere saying otherwise, I'm turning to you guys to help make sure I got this right.

 

[VolAgent]

Two $1 mil policies plus a $500k policy = $2.5 million total insurance.

The $1 million, from what I (mis)remember would be the carriers coordinating to not pay any more than the policy with the largest single benefit amount.

Gotcha, missed the math on the 2.5 Million. Which is what they would pay.

You are probably thinking DI, health insurance or perhaps even some type of P&C. Life insurance does not coordinate.

 

[DHK]

And I know it's not a "California" thing either... or I would have a clue about it.

I never kept any of my licensing materials. But with designation studies and access to Tools and Techniques of Life Insurance Planning through the VSA, I'm fairly well knowledgeable, even on obscure things.

 

[VolAgent]

So in effect, someone could make $100k/year, have 10 $1 mil term policies and his beneficiaries get $10 mil?

IF they could get it issued AND the companies did not discover it at claim time.

Almost certainly they would refuse to issue as they would see the other policies on the MIB. Assuming they got issued, they certainly would try to avoid paying by claiming fraud, which is what would have happened.

 

[Mrboone2]

IF they could get it issued AND the companies did not discover it at claim time.

Almost certainly they would refuse to issue as they would see the other policies on the MIB. Assuming they got issued, they certainly would try to avoid paying by claiming fraud, which is what would have happened.

But barring a substantiated fraud claim, each of those 10 policies would pay out?

 

[DHK]

So in effect, someone could make $100k/year, have 10 $1 mil term policies and his beneficiaries get $10 mil?

Yes, it is "possible" depending on the financial underwriting and justification for owning those policies.

But it's usually limited to a multiple of earnings and current age when policies are applied for.

The attached is from ANICO's financial underwriting guide. There's more to it than this, but it's the general idea.

 

[Mrboone2]

Yes, it is "possible" depending on the financial underwriting and justification for owning those policies.

But it's usually limited to a multiple of earnings and current age when policies are applied for.

The attached is from ANICO's financial underwriting guide. There's more to it than this, but it's the general idea.

This is why I'm glad IF.net exists - when I don't know, you guys make sure I do.

Thanks everyone!