Ran Across Two Children's Paid-Up Policies

[0b1kanobee]

I was out on an appointment earlier and came across a boatload of life insurance policies. A few expiring terms, some whole life and folks/relatives at the house wanting more. It was initially an Aflac review with an Aflac term expired but I figured I'd go poke around.

Part of my findings were two paid-up children's policies.
1) Child is now 15 and it is paid-up for $15,000 with Monumental.
2) Another Child 15 and it is paid-up for $10,000 with Common Wealth.
Both were 10 pays I think, if that matters but they are paid in full.
She's going to find me 3 other policies to look over when I come back. My question is, is there anything I could do with these paid-up policies? If so, what questions should I be asking? Besides paying the face amounts if something were to happen to either of these kids, is there anything else they can do (the policies). I have heard of kids being able to use monies from the policies for college or first cars ect. I'm really clueless and need to know what to look for or ask and what can/should I do if anything.

The one child has no beneficiary because the beneficiary died (her mother) and she (the payor/grandmother) called Monumental to have a new beneficiary put on but they said it could not be done. I told her I would check into that as well.

 

[tins]

I was out on an appointment earlier and came across a boatload of life insurance policies. A few expiring terms, some whole life and folks/relatives at the house wanting more. It was initially an Aflac review with an Aflac term expired but I figured I'd go poke around.

Part of my findings were two paid-up children's policies.
1) Child is now 15 and it is paid-up for $15,000 with Monumental.
2) Another Child 15 and it is paid-up for $10,000 with Common Wealth.
Both were 10 pays I think, if that matters but they are paid in full.
She's going to find me 3 other policies to look over when I come back. My question is, is there anything I could do with these paid-up policies? If so, what questions should I be asking? Besides paying the face amounts if something were to happen to either of these kids, is there anything else they can do (the policies). I have heard of kids being able to use monies from the policies for college or first cars ect. I'm really clueless and need to know what to look for or ask and what can/should I do if anything.

The one child has no beneficiary because the beneficiary died (her mother) and she (the payor/grandmother) called Monumental to have a new beneficiary put on but they said it could not be done. I told her I would check into that as well.

You should look into (1035) exchanging the CV into a company that offers single premium participating policies. It'll be an incredible difference should the kids live a few more years.

 

[rousemark]

I was out on an appointment earlier and came across a boatload of life insurance policies. A few expiring terms, some whole life and folks/relatives at the house wanting more. It was initially an Aflac review with an Aflac term expired but I figured I'd go poke around.

Part of my findings were two paid-up children's policies.
1) Child is now 15 and it is paid-up for $15,000 with Monumental.
2) Another Child 15 and it is paid-up for $10,000 with Common Wealth.
Both were 10 pays I think, if that matters but they are paid in full.
She's going to find me 3 other policies to look over when I come back. My question is, is there anything I could do with these paid-up policies? If so, what questions should I be asking? Besides paying the face amounts if something were to happen to either of these kids, is there anything else they can do (the policies). I have heard of kids being able to use monies from the policies for college or first cars ect. I'm really clueless and need to know what to look for or ask and what can/should I do if anything.

The one child has no beneficiary because the beneficiary died (her mother) and she (the payor/grandmother) called Monumental to have a new beneficiary put on but they said it could not be done. I told her I would check into that as well.

If they are paid up policies they would have cash value. Should be a table of cash value in the policies. The beneficiary change has to be made by the policy owner so you need to ascertain who the owner is. If it was the mother was the owner, then the ownership most likely passed to her estate and you will have to get into the disposition of the estate.

One obvious thing is to suggest "equalizing" the insurance on the children rather than having one favored over the other.

 

[Todd King]

Ben,

Look at Assurity's Estate Maximizer. Just to give you an example, if the one 15K policy was a male and you could get 13K out of the policy, that would buy a SPWL for a little over 81K!! Big difference! If the child is female, then it would be even more.

Call me if you need to and I can help you on this if you need it.

 

[0b1kanobee]

Call me if you need to and I can help you on this if you need it.

You are one of the first people on my list to call tomorrow.

 

[BNTRS]

Time out. SPWL? You are going to switch from a guaranteed paid up policy to a MEC on someone who is under 18? WTF?!

I can't come up with many scenarios where that makes sense. But I'm all ears if someone cares to explain.

 

[0b1kanobee]

When these children turn 18, can they use the cash values for college expenses or perhaps a first vehicle?

What are these policies supposed to do or can they do other than pay a death claim?

That's what I'm trying to figure out. Even if I can do something with them, they may not want to and I don't like looking stupid. So what are all the options they have or not have?

 

[rousemark]

Ben,

Look at Assurity's Estate Maximizer. Just to give you an example, if the one 15K policy was a male and you could get 13K out of the policy, that would buy a SPWL for a little over 81K!! Big difference! If the child is female, then it would be even more.

Call me if you need to and I can help you on this if you need it.

The cash value on a 10 pay life issued at age 0-5 is probably no more than $30.00 per $1000.00. Won't be anywhere close to 13K on a 15k policy.

 

[Todd King]

I was going to get into explaining the MEC problem when you called, but I'll say a little here since it's been brought up.

I don't think it would be a good idea if it will be used for cash values that quickly. In just a few short years, the cash value won't be that much and even if they did access it, they would have to pay taxes on it as if it were income.

Of course, there are several different scenarios that might fit. Like taking a big percentage of the cash values and putting it on the grandmother and making the kids the beneficiaries. That way it could be passed on without penalties and taxes. Just an idea for now.
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The cash value on a 10 pay life issued at age 0-5 is probably no more than $30.00 per $1000.00. Won't be anywhere close to 13K on a 15k policy.

You are probably correct on that. Just one more thing to find out before you can tell exactly what can be done.

 

[rousemark]

When these children turn 18, can they use the cash values for college expenses or perhaps a first vehicle?

What are these policies supposed to do or can they do other than pay a death claim?

That's what I'm trying to figure out. Even if I can do something with them, they may not want to and I don't like looking stupid. So what are all the options they have or not have?

They can use the cash value for any purpose they want.. if they cash the out, teh isnurance will terminate. If tehy access the cahs through a policy loan, the policy would remain in force but if they didn't pay the loan back, the interest would eat up the remaining cash value and he policy would terminate. Sometimes, people buy limited pay WL polices on kids to fund college, etc with the cash value but a face amount of only 10-15K will not have a lot of cash.

Usually, the polices are bought as "a gift that will outlast you." .. In other words, the policy is paid up, given to the insured and they have it for the rest of their life.