Seniors Scammed into Buying Insurance Policies They Don’t Need?

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Seniors are inundated with a never-ending onslaught of insurance offers. Disability insurance, Medigap, supplemental, mortgage life, self-funded healthcare, long-term insurance, permanent life, term life…and the list goes on.

Salesmen use many questionable tactics to get seniors, who are often times too trusting and too easily fooled, to buy insurance policies they don't need. For example, the pitch may offer a very low-cost first month premium, but the small type grants the insurer the right to charge your parent's credit card at a greatly inflated rate every month. They might try to sell your parent a long-term care policy which, because of the person's age at the time of purchase, is very expensive while providing very little financial benefit. Or, a salesman will scare your parents by saying their current policies are in danger of being canceled or the insurer not able to pay out.

Anyone caring for an aging parent should know what policies their parent has and be involved in future purchasing decisions. If you are not aware of what policies your elder parent has, now is the time to do some research. Checking your parent's insurance coverage will not be your most exciting caregiver assignment, but it may prove to be one of the most important. Identify questionable policies and pricing so that unnecessary coverage be canceled or changed.

 
 

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BryanWisda

Give a Hug

Sep 5, 2008

Here's a real world example...........

A client of mine, at age 80 was duped into buying a life insurance policy wherein the internal rate of return was horrible. Her local bank told her to lump sum into a life insurance policy $25,000 in turn the life insurance company gave her a policy with a death benefit of $32,000. The benefit to my client's children is $7,000. Let's do the math on this...... $25,000 put into a bond with a yield of 6% (yes these do exist even today 9/5/2008) would have earned her $7,500 after 5 years (granted you have to pay tax on these earnings whereas there is no income tax due on an inheritance). My point in bringing this up is to state that I believe that the insurance policy was sold to her by her bank representative to merely make a commission.

Why can't Congress & Senate pass a law that eliminates Caveat Emptor for senior citizens? Why can't Congress & Senate pass a law that requires bankers to act with fiduciary duty for their clients?

Regarding my example above, I do not want to suggest that all life insurance policies that are sold to seniors are bad. There are in fact some that are good. I have utilized life insurance with a senior to create a lot of wealth for their children (granted I am a fee-only planner and can't accept any insurance commissions) -- the example I cited above is a great example of a banker taking advantage of somebody when the banker is motivated by a commission.

 
 

BONNIEROUFF

Give a Hug

Oct 6, 2008

Regarding step #3: a life settlement may produce significantly more money vs. surrendering to the insurance company.

 
 

Beverley

Give a Hug

Jul 19, 2009

My mother is 92 this year, She has a Life Insurance with a Death Benefit of $15,000 which expires on her reaching 92. The insurance company is requesting an increase of three times her premuim for the same coverage but only up to her 95th birthday. Is this a right thing for them to do and, what guarantee do I have that the premium will not continually increase. What if she lives beyond 95. Are there any thoughts on this ....I do not know what to do. Are there any Insurance companies out there who are offering coverage for adults over 90 years old?

Thank you for what ever input you might have!

Camille, NY

 
  •  Comments 1 to 3 of 3 

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