I had a life insurance case some years ago where I was able to help a client replace a Mass Mutual whole life policy that was on the cusp of imploding. What I mean by that is that to the untrained eye, the client’s, the policy seemed to be doing just fine. It was building cash (on the assumed side) and appeared to go on to age 100 when the $5 million in cash value equaled the $5 million death benefit.

That’s exactly the way whole life insurance is supposed to work and they were happy that, even though it was costing a huge premium of $89k per year, their estate was taken care of with the wealth being transferred tax free to the next generation. I asked, as a professional courtesy, if I might review their most recent annual statement just to ensure that what they thought they had was on solid ground and that it was at the best possible rate. As it turned out (my reference to the cusp), the policy assumptions were due to start declining that year and the guarantees soon followed. As it turned out, and it’s a good thing we addressed it, the Mass Mutual life insurance would have lapsed at 95 (the person it was covering is now 97). No amount of money could have pulled it out of the toilet.

So we replaced the policy with a GUL, no lapse guarantee UL, a guaranteed level premium to age 100, with a guaranteed death benefit to age 121 and by rolling the cash value (which really had no value) into the new policy we were able to drive the annual premium down to $33,000 a year. We had a long discussion about the fact that the GUL is kind of a sensitive product with some companies and that payments needed to made on time to maintain the integrity of the guarantees. Since the policy was held in a trust, the trustee just made a habit of paying the premium a month early each year and all was good…….until! Until the life insurance company lost a payment, in house, after it was received in time. Per the insurance company policy it didn’t send out a late notice because the policy had cash value. It took the payment that it already had (lost in house) out of the cash value and according to them that breached the firewall of death of the lifetime guarantee so the policy was now only guaranteed to age 99, not 121.

So, who’s going to stand next to you and fight that fight? If you are most life insurance customers out there, by now you have no idea who your agent was or where they might be or if they are even in the business anymore, so inviting them to the fight with you is worthless. If you have an agent as my clients did you have someone that can coordinate a full on attack to get the company to right their wrong. In this case we brought to bear the state insurance commission, all of the records, the family attorney, myself and another agent I worked with on the case and we beat this company’s attempt to weasel out of their commitment.

Bottom line. I don’t think I can stress enough the need, if not just the prudence, of hanging on to the life insurance agent that wrote your original policy. If they get out of the business, insist from them or the company that they be replaced by a good customer service oriented agent and insist that the agent get up to speed on what was sold and promised and sort of insinuated. It is your original agent that can take your side or pick up the pieces when your life insurance policy goes south. It is their replacement that can track the original agent down and show you who to sue if your IUL or UL or VUL doesn’t do what you were told to expect. If you have questions, call or email me directly. My name is Ed Hinerman. Let’s talk.

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