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I have been paying The Order of Foresters, a life insurance company, for 30 years. I pay$ 179.00 a month .
Anonymous3 views3 answers
The company send me a letter last month saying that my policy will lapsed at the end of this week, According to them, the policy went up and they had been taking the difference from one of the accounts. I am retired and in a fixed income, I wish they had told me of this situation a year ago, when it happened. I have been paying this policy, so that when I am not around I can still take care of my loves ones. Please advise.
A life insurance police is a contract, and its terms govern the parties' rights. If this is "term" insurance, then it does lapse after a set number of years.
If the carrier has the right to cancel the policy because of your breach in not paying the required premiums, and their procedure in cancelling or paying themselves from another account, is something you presumably agreed to in that contract, and those terms as well will be in the policy.
Much will depend on whether this is a whole life or term policy. If it is whole life and you are behind in payments, the cash value of the policy is generally used to pay premiums that haven't been paid. You are going to have to ask them for a history of the cash value of the policy and the payment premiums taken out. If you're paying money AND money is being taken out to keep up with premiums, it would seem to me that something is amiss. In any event, you should ask for the policy to be reinstated once you learn what exactly happened. And if you are receiving premium notices for $179/month to keep the policy going, there's a whole other ball of wax to deal with.
There are many factors which should be examined, and the laws on this are mildly complex. Some factors have been mentioned my colleagues, such as whole life v. term (but there are also sub-species, e.g., 20-payment life, ten-year level term, and on and on. Other factors are how you used your dividends -- paid up additional insurance v. kept at interest; loans, etc etc etc.
There are also rules governing lapses and reinstatement designed to prevent a lapse, or let you reinstate, and rules governing sales of life insurance, and rules governing how they treat you after the sale, and what they have to tell you and when.
Do what you need to do to avoid an immediate lapse, and then consult an attorney familiar with life insurance policies. Bring every scrap of paper you can find, particularly the policy. You may be able to get free advice from a broker, but they are really in the sales business. A common problem with life insurance is that the sales person is more concerned with commission than your well being.
Most attorneys will give you a free or low cost initial consultation, which may be all you need to understand what's happening and what your options are.
