Policy Ownership on Someone Else- Insurable Interest

From time to time, I receive requests for insurance on another person. The question of insurable interest is addressed to those who have absolutely none. Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence of the insured. In some cases this can be confusing to a consumer.

To make it simple: Do not pursue starting a contract of insurance without consent of the adult insured. 

When asked "Can I take out a policy on by boyfriend without telling him?"

The answer is "No, you cannot."
"But we live together.. I like the quote, and I will pay for the policy."
"True, but why are you trying to insure him without his knowledge?"
By reading the last question, you should understand why insurable interest has to be addressed.

A person is allowed to pay for a policy on someone else's behalf, but making herself the owner and beneficiary without the insured's knowledge could seem to be suspicious behavior, though not intended. It is also illegal for an Agent to write the policy without seeing the adult insured and obtaining signatures.

Would you be disturbed learning that someone randomly started a $100k insurance policy on your life without asking permission?

The boyfriend has to apply for the coverage himself and then specify his girlfriend to be a beneficiary to the writing/witnessing agent. I used this example because it is so very common and can confuse people. Yes, the two live together, and he financially supports the household, but relationships end everyday. Marriage is legal just like insurance. He could sign for his girlfriend to be the owner out of his own free will after the policy issues, but this is rare.

Most policies do not need to specify an owner as it is automatically the insured. "Ownership" means being the person to manage and make changes to a policy without the need for the insured.

Who is commonly considered to bear insurable interest?
Parents/ Legal Guardian
Grandparents
Spouse (Common-law marriage is no longer acceptable in many states.)
Business Owner/ Company (Key Employee- a different subject for a later post.)
These individuals may apply for coverage for someone else, pay the premium, and be listed as beneficiary.

Paying the policy premium does not declare ownership. The designation for this is "Payor" only.
The signature of a child is not required.
A policy can be taken out by an adult child on a parent, but the parent must be able to sign acknowledgement. Such as taking out a policy on your father.

Underwriters have to question the intent of people taking out insurance on an individual to prevent fraud and misunderstanding. It is also the law.

Special circumstances apply for Aunts and Uncles if the child is also a dependent. Otherwise the owner would be the child's parent if specified and the Aunt would be the payor.

Most policies do not require to specify an owner, but for policies earning dividends, it may be desired.
www.MyLifeInsuranceGeorgia.com

Whole-Life Making a Comeback

The old-fashioned whole-life policy has proven to be more agile during these economic times than ever before. So, to whom? From what I witness, the same baby-boomer generation that was told to buy term and invest the rest in stocks or bonds. Though I was young, I remember watching the subject on television during the 90's and yes, it did seem like a good plan at first but no one anticipated a recession so great to make investments perform poorly. (To those who actually did invest.) Also, there was not clear explanation to many that term policies expire.

"Insurance is not an investment product." Remember this sentence. No self-respecting agent will convince you that insurance is an investment. It is however, smart financial planning and protection. Also, do not misuse the value of a whole-life policy to go shopping. Life insurance does offer a better interest rate than a normal savings account or CD from a bank, (plus the death benefit of thousands of dollars of course) but the intention is not for investing to increase income.

Upon the expiration of the term policies, thousands of people in their retirement years are left to pay higher premiums based on their age and state of health. Only few can afford to pay hundreds of dollars on a term policy after the age of 65. If during the years of the Term policy, a person does not save money away for final planning, then to seek coverage comes without choice. The highest I have been told by a lady shopping for coverage was over $500 dollars a month to renew an expired term policy. For this much amount, it is probably better to deposit in a savings account. Holding on to a small whole-life policy would have prevented the matter because the premium would have been locked in for life.

Painting a picture:
Year 1995 Man age 45: Whole Life is $70 monthly, 20-yr Term is $45 monthly
Year 2015, 20-year Term expires.

Man age 65: Whole life is still $70, with accrued dividends. Term policy renews at $380 monthly
Man age 80: Whole life is paid, or took extended insurance. Term policy is unaffordable beyond reason.
Most term policies become annual renewable after the initial policy term expires. The annual premium increases every year thereafter. Companies will not write a 20-year term policy for someone over the age of 65.

Whole-life and Term do the same, pay a death benefit. However whole-life is permanent with a savings component. You will hear or may have heard of "cash value" policies, but it is easy to misunderstand the different types that are offered as each carrier varies. There are companies that sell Universal Life and Term policies bearing some whole-life qualities. Always read your paperwork and ask questions. Whole-life is simple, it has not changed and the reason for its comeback is its reliability.

Whether for a small death benefit or a very large amount, those who did not take the advice of replacing their policies with Term, still have insurance today. Many have policies that have been paid in full while others have policies on extended insurance. Extended insurance is when the value of the policy is used to pay premiums- highly useful for seniors no longer able to work. It does not hurt to consider investing, but at the risk of experiencing little to no gain. It is best to keep your final planning separate from financial ventures until there is demonstrated improvement in the economy. Should an investment fail or 401k is depleted, a whole-life policy remains permanent.
www.MyLifeInsuranceGeorgia.com

The Insurance Lady

My name is Jonni Hoskins, an Insurance Agent in Georgia.

Some people would say that what I do is boring, however, I find it a highly interesting field. There is always more to learn and explore in the world of insurance, so much that I love to talk and write about it. I am an agent licensed in Health, Personal Lines (Property), Accident/Sickness, and Life. I am an insurance company recruiter's dream agent- one who study's everything out of passion and carry multiple designations.

I talk about things consumers may not understand effortlessly, even the more complex matters. I research underwriting of different companies, which I do not share publicly, so do not bother asking. What I do explain are answers to questions people have about their own policies, regardless of the type. I am not "flowery" and believe in giving blunt, "to-the-point" answers because the subject matter of death and illness are serious, sometimes depressing for many people. Financial preparation and income protection are serious.

Major Medical insurance only pays for some of your care, including preventative. There are still deductibles, coinsurance, prescriptions, and transportation. Unless your policy has a special rider, it will not pay any living expenses and its cost rises after a lapse or review to a higher premium.

I do not only encourage people to use policies for the unexpected; I strongly express the importance of saving. It doesn't matter how you save money, just do it. Acquire assets of collateral. Do not waste money by renting an apartment for 15 years, buy a home if possible. A landlord would have evicted me and my dog when I became disabled. People cannot afford to care about your financial dilemmas in this economy.

Put a few dollars away into a retirement fund where the funds can be accessible in the event of illness or disability too. There are so many ways to protect yourself from the unknown. Always be willing to sacrifice a few dollars this. We live a nation where people spend $4 on cigarettes or coffee a day, even $14+ for lunch daily. We live in a nation where people spend $70+ a month on car insurance for "full-coverage" and nothing on their own lives. We pay %10 to churches on tides and that same church may not be able to pay your electric and water bills. We are taxed at least %29 to 33% for a system that will rather you lose all you have gained before even considering granting you free health care.

Start saving by any means and do not waste money. Who cares about a phone bill, when you do not have food, dignified care and medication. Only the rich can survive months of no incoming income. Try doing this for 2 years- it is impossible.

The application process of social services and assistance are nightmares of false hope, especially if you are single. There are entire families on waiting lists right now, while someone like me is expected to give up and move-in with a friend or family member. The feelings of abandonment and rejection are something no one should endure, especially when not healthy enough to endure loss after loss. This is the truth. A very harsh truth. Your tax dollars pay for others and it is still not enough to go around and many abuse the system. Build your own plan.

Ask me for unbiased advice. When out in the field, I am amazed by how many people do not understand what they are paying for and even more blown away by the growing amount of people who wait until it is too late to acquire health and life insurance. At first, I thought it was only in Middle Georgia, but no- It is a state-wide issue.

Georgia requires liability insurance to others for automotive operation; we even add full coverage to vehicles that are not worth the premiums... Why do people go overboard with property and ignore their own bodies? I'll never know. Maybe it is because of lack of understanding. Use my blog entries as reference. You may even call me on my free time (478) 935-9929 at home. I love to answer questions because I feel like I am helping someone. If it were not for my professional career and my chihuahua, my life would be unfulfilled and lonely.

I am the "Insurance Lady" in a field that was once dominated by men. I take pride in what I do and all of my accomplishments. I also get travel, promote awareness, participate in events, and meet unique and interesting people to share all that I have learned over the years on a daily basis. :)

Enjoy my blog! Maybe the covered subjects could help you or someone you know too.
www.MyLifeInsuranceGeorgia.com