No, really! Not return of premium term insurance. Not some magic vanishing premium whole life thing. This isn’t even the latest life settlement, premium financed mega mess.
I think this is particularly clever and nice too. A company that is reaching out and saying that if you’re a low income family with school age children they’ll give you $50,000 of free life insurance so that if something does happen your kids will have at least enough money to get a few years of college under their belt.
The nice thing is that Mass Mutual is doing it at all. Offering $50,000 term insurance policies for families that make under $40,000 a year at no charge is the kind of thing companies ought to do. The clever part of it is that there is a very slim chance that there’s going to be a lot of exposure to claims. While I don’t doubt Mass Mutual’s sincerity with this program, putting out brochures at Boys and Girls Club and the YMCA or wherever…..just putting out brochures is truly not going to attract a lot of business. And when it gets more complicated by having them have to meet with an agent and do an exam, and produce last year’s taxes…..and then you figure the low chance of mortality and the fact that Mass Mutual isn’t going to pay out death benefits, but rather school expenses as submitted. Well, honestly they’re not going to get hurt by this but that’s OK.
The fact that they’re doing it and it is going to have a positive impact on some families is great stuff. If every company did a little bit of this it would make a difference. Kind of like what I proposed not too long ago and several times before about a company stepping forward and offering convertible children’s life insurance for children diagnosed with type 1 diabetes. What a PR move!
No one is doing it and in fact companies are quick and open about saying heck no. But let’s look at this from a reality perspective. There are companies out there who are actively wooing adults with type 1 diabetes and type 2 diabetes. Every agency on line is using diabetes for a keyword. The truth is that well controlled diabetes is good business for the insurance company and when someone with diabetes gets good treatment from an insurance company, well, they are referral animals. So, why would a company overlook a chance to become a hero in the diabetic world by doing something that no one else will do, insuring children with type 1 diabetes. They don’t even have to do it for free. They can even charge more than a child without diabetes would be charged.
And kick me if I’m wrong, but show me the downside! These would be child burial policies for $10,000 so we’re not talking about sinking an insurance ship with claims. The mortality experience is going to be good. Yes, I said that and again, kick me if I’m wrong. The mortality experience is going to be good. I’ve thrown this out before and never even been argued with, but my understanding is that most children who die from type 1 diabetes are diagnosed on an autopsy. If they are diagnosed and treated their mortality experience is good, maybe not quite as good as a child without, but not far from it.
What about the conversion? What happens when all of those $10,000 policies get converted at age 23 to $100,000 policies? First of all that’s not going to happen. This is America. A lot of the $10k policies will lapse and very few of the policies will be converted. Very little risk that the life insurance company is going to be scraping to pay out death benefits. And remember, I said it didn’t have to be free and didn’t even have to cost the same as a child without diabetes. And the company will be absolute heroes in a few families and the entire diabetic community.
Bottom line. The ADA refuses to talk about this and the JDRF has kind of just not gotten back to me to see how they can help. Mass Mutual is off the hook. I think they’ve done their civic duty. How about American General? God knows AIG could use some low liability PR. They love adult diabetes business. What about Banner Life or ING Reliastar, or West Coast Life or Pru or Trans or United of Omaha or, or, or, or…………….