Posted: 1/31/2010 7:17:14 PM EDT
| my brother bought life insurance for my dad. he offered us (siblings) a buy-in. we simply split the monthly payment 5 ways and the payout will be split 5 ways equally. he owns the policy. is this a good idea? should we all be listed as beneficiaries? if so, does it matter since he owns the policy & change it at will? should we get legal documentation of this arrangement? I don't think he will cheat us but money can change people. of course we wish for dad to have a long restful retirement. wadda ya think? |
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99% of life insurance is garbage....The only type of insurance you should ever work with is term life insurance. Any of the whole life and other "investment" products are just another way for a guy in a suit to separate you from your money.
ETA: I think its kind of sick buying life insurance on another person unless you are counting on them for income. I can almost guarantee (hate to say it) that some insurance salesman is taking advantage of your brother. I have a large term policy on myself and a little from work. It costs like $300/year for 500K of insurance. Some of the garbage products would be $3000/year with "investment" potential. |
| depends, but i would have it all in writing and witnessed, written contracts keep friends and family ...friends and family. Definitely yes on the beneficary, but the owner can do what he pleases. I spent almost30 years in that business and what he buys depends a lot on the situation and term at older ages does not always makes sense, even though that is what I sold 99% of the time. I no longer have a license, but if I can answer any questions, fire away, might be a day or 2, but I will get back to you |
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It is very strange for your brother to take out a policy on yoru Dad. Your father should have taken out his own policy and then he could have added it to his living will. Your father would have had to authorize your borther to take out that policy on him, otherwise it is not legal. Most life insurance over $100,000 usually requires a medical review prior to them writing your policy. So either way, your father would need to be checked out by a nurse prior to them approving your application. Then there is a waiting period in which the insurance company can do some homework to make sure everything you entered on yoru application is correct. If they find anything out that was a lie, they will terminate the policy.
I would definitely get something in writing. I have see my Dad's side of the family get a little nuts when their parents passed away. So it is much better to have it in writing so there is no worry. |
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Get it in writing as others have stated. Also, get in writing what will happen if 1 of the 5 parties pays on the insurance for a few years then decides they aren't going to pay anymore.
To be honest, sounds like you all should contact a financial professional that deals with estate planning. Your father could setup an Irrevocable Life Insurance Trust with you all listed as the beneficiaries. The Trust would own and make payments on the policy. Beneficiaries or the policy can't be changed when it's in a ILIT. The only way to 'cancel' it, would be to stop funding the policy. |
| TERM life is the only way to go!!!! As the policy holder your brother could change beneficiaries as well as the payout amounts. If you are worried about fraud there are term policies where a majority of the beneficiaries must vote/agree to any changes to the policy. Sadly I should know what this is called, but I can't remember, it has been several years. If he has not already found a company or know a friend I have several that I used to work with and would be happy to suggest them, PM me if you want their info. |
| This is not uncommon at all. Children that do not want to get stuck with final expenses after a parent passes away can do this as an option. As we all know, life insurance gets more expensive as we get older and yes our health can change as well. The premiums can be expensive the longer we wait. If an older parent with health problems can't afford the premium, I've had the children pitch in to help pay. You can set a policy up to have a "Payor" and an "Owner" and they can be two different people. The owner, of course, would have control over the policy (ie, make changes to beneficiaries or cancel the policy), so you would want someone you trust to be the owner. Most insurance companies won't let several people pay, so one person would have to be the payor and everyone else pay that person (you would have to work it out between yourselves what would happen if someone did not pay). Now, as for term-vs-perm insurance. I overlook comments that life insurance is "garbage". Listen, life insurance can do a lot of things and it depends on what you are looking for and what you want to get out of it. The bottom line is this, do you want to take care of your family, financially, if you die? I've dealt with people with the attitude that, "I don't care what happens cause I'll be dead." I have no patience for those people. Get all the facts and look around. Be wary of those that want to write something right then and there. This particular case is at least a 3 appoint life policy. I've been in the business for 9 years now and the gentleman that works for us has been in the business 13 years. PM me and I will give you his info if you like. Sorry for any typos in this, I don't have time to proof it, but you guys get the point. Thanks! |
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In my oponion life insurance should be mainly considered as way to replace income if there are dependents (younger children) involved. Or to make sure funeral costs are covered, which depending on the state could be as high as $25,000.
For me I carry a good bit as my children are still young and my wife would need to be able to provide for them for a long time. Once the kids are out of the house I will reduce the amount but leave enough that my wife will still have a decent life if I should go before her and my funeral and estate will be handled with no extra burden on my children or family. If you feel it is needed to have life insurance on your father then you may want to consider getting your own policy instead of splitting 5 ways. That way if anyone does not act as you think or hope they would, you don't have to strain your family relationships. If you do split it then without hesitation you should have written confirmation of the deal. If only to reduce the probate liabilities. And spell out exactly what percentages go where and to who. I do not intend this to be a reflection on anyonbe in your family, but there are legal issues with estates and inheritance you must consider. Also, God Forbid anything happen to your brother and Dad at the same time, you would need some type of document to prove the arrangement with the owner of the policy deceased. My Mother in law works for our county courts and she sees some really messed up situations when it come to this kind of stuff. Things you couldn't hardly dream up, and people get stuck paying attorneys to unravel all the beauracratic nightmares. |