WHOLE life morphing into TERM?

[Jon Dough]

I don't do enough life to fully grasp this so thought I would ask here

Medicare client--husband bought a Whole life plan from Principal some years ago.

Several years ago her husband was sent some stock and an explanation that the firm had been "demutualized"

Apparently in this time the plan reverted to Term rather than Life

I suspect they got a letter stating they could accept a change to Term or go somewhere else etc and they missed the letter. No one ever reads the letters.

They want Whole but now in their late 60s and the amount they need is prohibitive

Can you illuminate/advise? THANKS

 

[Tahoe Ray]

A nonforfeiture option for WL can be extended term insurance....guessing that's what happened.

 

[VolAgent]

My guess, and this is strictly a guess based upon what you shared..

They had a whole life policy and had selected premium offset for the dividends with extended term selected as the non-forfeiture option. Once Principal demutualized, the dividends stopped. The dividends that were paying all or part of the premium stopped. At that point the policy went into grace period and into non-forfeiture and thus is now in extended term.

Again, purely a guess.

 

[Newby]

I have run into a lot of people through the years he thought that the dividends playing their Premium was the same as a paid up policy. They just put the premiums out of their mind and don’t pay any attention to them from that point on. If the dividends don’t keep it afloat it could default to extended term

 

[Jon Dough]

THANKS!!!