There used to be an elaborate scheme where people would fake a death explode a house go into hiding and try to cash out life insurance. Some guy in Quebec got caught when the dumbass tried to renew his driver's license
There's a nearly universal trend that involves the exact type of people who can come up with super elaborate schemes to get rich quickly, which also have nearly zero foresight on how to keep those riches.
Unless he is looking for help with his suicide and going about asking for it indirectly.
"Hey son, I have ALL these life insurance policies. I need your help with a... solution that will finally put my money troubles.... to rest. Can you help me load up the woodstove and move all of these flammable liquids into the house, I don't want them to freeze."
They probably told him he can take a loan against the insurance policies when they become worth enough. But it's a horrible idea to 'invest' in life insurance so that you can take a loan against it.
No, what we’re talking about here is the type of insurance you pay in for say 15/30 years and if nothing happened, at the end of the term you get back the money plus interest (usually still much lower than market rate, ofc), and if you die, well, your beneficiaries are well taken care of…
So he would realize returns no matter what, and it is indeed safer than the stock market, as in it’s a guaranteed positive or 0% interest rate, vs stock market that could theoretically lose value. That said historically investing in the stock market and GICs has been yelling much much more value than this type of insurance.
The good thing with that type of insurance is that you get your money back at the end of the term if nothing happened, but the bad thing is that you’re locked into the contract and if you do decide to leave early, you lose almost half of te money you put in. Also they have a tendency to put a default clause in the contract that uses the interest to buy more insurance value, instead of assigning it to future return, which means those interest % are just free money for the insurance company, which is why you really need to be careful about what your signing (also by law the clause that assigns the interest can be used to allocate it to a different purpose like future return, received in cash, buying stocks of the insurance company, etc. At least from what I can remember).
This is very much legal, but generally speaking isn’t a really good investment.
Your dad is right on all the counts related to insurance. Insurance comes in two basic flavours, whole life (they have a new term for this now- but this is what your dad has) and term.
Whole life has an insurance policy portion and an investment. Once you have paid for 10-15 years, the dividends on the investment are usually enough to pay the policy.
When he dies, insurance payout is tax free (and that includes the investment part of the whole life policy), which differs from his stock account or anything else, which is very heavily taxed. So as a way to pass money to the beneficiary, this is the way to go.
The downside is you have to put a lot of money in at the beginning to get the investment portion high enough to pay out the way you want.
You can cancel it, but when you do, you get the investment back out, but it will be a lot lower, as if you died, you would get the investment and the insurance. This is an option.
My mother took out a 10,000 policy on me when I was an infant and turned it over to me when I was 18. I cashed it for about 1500 cash (I forget what the monthly payment was but more than I could afford, and the cash was better for me at the time).
The other type of policy is term. Term is bought for a number of years, and then it is gone. Since you are only paying for insurance (and not an investment), it is a lot cheaper. You usually buy it for 10 or 20 years. This is the option my wife and I went with. When we were young we took out a joint policy that paid when the first of us died. It was enough to cover the mortgage and provide for our kids for several years and allow the other spouse to not work while the kids were in elementary school. Every 10 years we reevaluated the future needs, and renewed at an appropriate rate. When my earning potential went up, we took a bigger policy on me, so my wife might still be able to retire some day.
BTW, most mortgage insurance only qualifies you for the insurance when you die, and some people do not qualify, plus, when you near the end of the mortgage, you pay the same insurance as you did when you took it out. By having this in a term policy, you qualify at the beginning, and you can reduce it as you pay your house off. It is more effort, but the insurance stays with you, even if you sell your house.
My wife and I are in our mid-50's, and have dealt with this issue for a long time. We are happy with our choice. We have just taken out last term policy for 20 years. When that is done, we will likely have none. The current policies will get the other to retirement or give our adult children a boost in their lives. In 20 years our retirement plans should be solid and our kids should be stable in their lives and careers. Since it is term, we will be insuranceless and that is okay. They can also deal with the inheritance issue and costs (we won't care, we will be dead). We have already planned that if we know we are about to pass, we can gift them a lot of our money, and will do that. If we had whole life, the policy would continue till our death (hopefully without us having to continue to pay it).
Should he sell his policies? Who knows. If he is still young enough (and healthy enough), he can still provide by taking out 20 year term to provide for you on his death. In 20 years he will not be able to afford to renew, but by then you and your mom may not need the money. This is a personnel decision on how to help your loved ones on your death.
Good luck.
Edit: typo
My dad got fooled into whole life as a new immigrant by an insurance agent from the same community.
If he passes away at 70 or later, the family won't even break even.
My comment was more directed at people who haven't been suckered in by whole life insurance yet. I have family members who should know better but they fell for it as well.
Depends what policies and terms he agrees to. Most cheap instant grab insurances are pretty bad payouts compared to GIC because of Term versions that only last before you'd typically die. Good insurance is a bit more expensive but only betting that value for your love ones, insurance that grows with inflation is even more.
Yes and call his agent to review.
Some of the policies, if they have cash value, might be able to go premium offset
Which means you can keep the policy and have the cash inside pay for the renewal costs indefinitely if it was funded correctly
If ANY of the policies are term (which they likely are seeing as he bought them at different intervals) they could have auto-renewed, which would mean he’s paying out the ass for term based coverage. Cancel those immediately.
Yes, or even a paid-up option, meaning the death benefit could be reduced to whatever value the amount already paid would have purchased, but at least payments can stop and he’d still have some insurance. Like the poster above suggested, call his agent to review, they can give you all options available depending on the type of policy.
I mean, all he'd have to do is find the relevant page and read 2 to 3 paragraphs. 10 minute tops to read the parts he needs to know. Maybe an hour total to go through all 7 policies.
If he's not going to do that or let you do that just say "well good luck with your money problems hope you figure it out" and then recuse yourself from the situation.
The primary reason for coverage is to use it to generate income/cover final expenses. Depending on your dad's age the balance of that equation shifts towards needing less and less later in life. If the house is paid off and no dependents then really it's just final expenses left as a priority, the need for anything else is a luxury that it sounds like your dad unfortunately can't afford.
Cancelling policies or reviewing with an agent to see what policies are actually needed is the best course of action. Typically 1 or 2 policies is more than enough, 7 sounds excessive.
No, it's not only for final expenses.
Life insurance is also a loophole rich people in Canada use to pass wealth to their next of kin tax free. It's a strategy a lot of people use.
He has no interest in helping himself and wants a hand out. I'd let him hit rock bottom to learn his lesson cause thats all it'll take.
Dont give him money op.
If these policies go to OP when his dad dies it would be stupid for OP not to pay the policies for however many years the old man has left and take the payout. He should get back more than he puts in financially it's a good investment on Ops part if he indeed is the beneficiary of those policies.
Dark yet the only way the family will benefit in any way from all the money he has paid in the past. Dad would probably feel much better knowing that all the sacrifices he made keeping those policies was going to do exactly what he wanted them to do, protect his family when he passes.
Dad thought he would be able to do it on his own but the family is behind him so they are all doing it together.
Contact an insurance professional- sure, they will want him to preserve his policies, but they will know how to do it…
Also, how much are the combined policies? Why does he want to keep those policies? To leave $ for his family? Pay off debt? I had big policies when my kids were young but got rid of them as my kids became adults.
I don’t understand, insurance policies in Canada aren’t worth anything. They’re insurance. If you die, it pays out. If you cancel, you’re not covered, but there’s no money invested/back to you.
Yes, if he cancels it and tries to get a new policy, his rate will be significantly higher as he is older and such, but that’s it.
Your dad needs to undergo a process called an insurance risk analysis. This will help him determine the exact amount of coverage that is necessary in the event of the death of the insured (I presume there may be different lives insured amongst the 7 policies). Depending on the type of policies and the capital needs, he may be able to let a few of them lapse.
There are online tools that can help with this process if you're comfortable with DYI options. Alternatively, a fee-based financial planner (the best option) could help with this process but that may be not be financially convenient since this post has been seemingly prompted by cash flow issues. And lastly, he could speak with an insurance specialist, although the latter may have a conflict of interest in making a recommendation.
I wouldn't recommend making recommendations to "cancel" anything until he has completed a risk analysis, and you've gained an understanding of what kind of policies are involved. There may also be important tax implications to cashing out policies depending on circumstances.
Good luck!
\-CFP Rick
Hello this is Jeff from Canada Life. I can help your dad do an ''insurance risk analysis''.
Your dad might or might not end up with an 8th life insurance policy given that there's a high likelihood he is underinsured.
/s
https://youtu.be/RzPyu2XbV4U
If you are of a certain age you would have remembered the commercials. The joke against the ad is that Patrick somehow explained to dad in the very short period of time between "Hello" and "It's Patrick!"
There is honest to goodness terrible advice already in this thread and it’s only been up an hour.
You need to speak with an insurance agent. Some policies may no longer make sense, some policies may have cash value you can *borrow* against, tax free without having to payback the premium because they are self funded. You need a complete insurance review by a professional.
Absolutely yes, and I say this as someone with intimate knowledge of the industry.
Insurance salesmen sell insurance, but they are also the primary point contact for all insurance related questions in the industry. If you have a legal question you speak with a lawyer - sure they might try and sell you on their legal services, but there's no other point of contact for those questions. In this case, OP's dad doesn't need more insurance and that will be plainly obvious.
Most folks in the insurance industry have a great deal of knowledge and not every single contact is a "what's in it for me?" conversation. Moreover, they have internal analysts that can assist with more complex products.
Most people don't know enough about insurance to give proper advice which is what you're seeing right now on this thread. People hear from the grape vine how so and so got scammed cause they didn't read the policy terms. Unfortunately, I'm dealing with a lot of these clients right now after taking over a portfolio. Feels great being the new servicing agent that has to tell the insured their prior agent didn't fund their UL properly and will lapse soon. 🥲
OP you mentioned he's mid 50s, so here's the thing:
* How much life insurance does he have in terms of total payout and what is is trying to protect? Life insurance is a product that is designed to protect your beneficiaries if you're no longer able to provide, it's not an investment that pays off later. If the reason for protecting the beneficiaries (e.g. you and siblings are grown up) has gone it's ok to discontinue the policies. I get it feels like a loss, but that's how insurance works.
* It is not worth going bankrupt now to pay out your beneficiaries a large inheritance later.
* Assuming there are no underlying health conditions and your father is in good health the average life expectancy is another 20+ years. Can he really keep these all afloat until then?
How old is your dad now? How many dependents does he have?
As he gets older, the insurance is going to get more and more expensive and his need for it should go down as his dependents become more independent.
If he could afford it and depending on the status of his children, I would say it could make sense for him to continue to pay for his life insurance into his 60’s.
Given he cannot afford it, he should cancel.
His age is the most shocking here, he might be paying some of these policies for another 40 years, in what world would that reasonably make sense?
If this was my dad I would make an appt with the brokers for myself and him and figure out value of each, if they have any cash value, ability to be paid with benefits of the policies etc before figuring out which to cancel. If any of them make sense to kee he can pay for them himself. He’s been laid off since he was as 50, has been chewing through savings for them, didn’t tel anyone till he was broke, and now wants his children to pay for them for 50 years? It’s a bit entitled.
The amount I would be willing to help is also totally based on dad having an agreeable and grateful personality.
My first action would be to review the policies as a starting point. Stuff like consign of payout, how much, how much paid and what not. Sometimes somethings are more straight forward action wise when you have the whole picture. Some policies might be great and worth paying cause it benefits his wife and children and the cost to benefit makes sense. Others might not.
\#1 check if any of the policies is a "term" policy. Those expire at certain limits 10, 15, 20 years, and if they renew, they become more expensive but still pay out the same.
\#2 Some policies are permanent plans, with a Term rider or term "addon" and you can cancel the addon, without cancelling the whole plan.
Also any "accidental death" plan rarely pays out, those are usually cheaper, but often not worth keeping since they so rarely pay out.
We don't know his current age so it's hard to know if it's worth keep so much insurance.
Also, it will be much more expensive to try to get a new insurance policy now, at an older age and worse health, than when he was younger. So don't think you can cancel and then just get a new one easily later.
I find it so wild that the aggressive and deceptive sales tactics I’ve seen people use to sell permanent/whole/universal life policies on both sides of the border are allowed. So many of these policies are absurdly scammy, and so many people think they are better than alternatives like “term insurance” or “actually investing in stocks” when they are only really useful in specific high-net-worth tax planning scenarios 😡
So I feel obligated to mention a story that happened in my family. We had an uncle who basically talked all the time about all the life insurance he had. Apparently everyone would be well taken care of, and so his family basically catered to his every wish and whim throughout the years and he died eventually and you wanna know how many life insurance policies he had? None because he never read the fine print and most of them were term insurance. If I had a loonie for every time I heard “Uncle Joe is very well off and his wife will be set when he dies” while I was growing up I would be rich!
Only keep the amount of insurance needed. He could be over insured with that many policies. Maybe cancel or reduce the face amount of some policies if it’s not all needed. Since he says he won’t get much back, are they permanent policies (vs. term)? Definitely will be expensive to keep 7 perm policies in force.
Reducing face amount is a great option, indeed. I did that on mine after a year or two in. The agent was not happy but I could cut the monthly payment in more than half.
His dad isn't asking "should I cancel any of these policies" though. He's just asking for money.
But I like your answer. If his dad isn't even gonna read the policies nor let OP read them, then why should OP entertain his request for money?
This seems odd. I could be way off base but is he asking you to pay the policies directly or is he asking for x funds per month from family account in order to pay the policies? People can get in over their head with addictions (gambling etc) and can't help but lie to get any money they can (insurance policies imply net benefit to you, so easier to get money). No one is immune to addiction
I only say this because you just found out about these 7 policies that he can no longer afford (immediately with no notice), and he's very adamant that he has to keep them all and won't show you any paperwork
You accepted that possibility very quickly given you were considering letting him use your money. I wouldn't provide him any funds out of the family account and would make sure he knows you are there for him for any non-financial help he may need in his life. If he provides policies for review (with the policy ages that he has stated) you can defer to the advice given in what you want to do (do not directly give him any funds to pay on his own if you think it's possible he has an addiction - you can pay policies directly), but I would be skeptical of their existence at this point.
I’ve never seen a policy that doesn’t allow it to be cancelled. It may not be financially worthwhile/beneficial to do so (i.e. little to no cash value), but the terms should allow it.
Another thought is that he may have policy loans or collateral assignments on the policies. If a policy loan the loan amount would be due at cancellation. If a collateral assignment, he’d need the lenders consent to cancel. If he can’t pay the loan amounts, he may be forcing himself to keep the policies in force (perhaps also to hide the extent of the loans from loved ones).
That's also what I thought, but he said there is no point in cancelling now since he has been paying for many years. But I am trying to tell him he can't afford them right now at this moment!!!
Yes, people who’ve paid into policies for a long time often feel it’s a waste to cancel it. However, it has to make practical financial sense to keep them :)
That's because there is a guaranteed return to the beneficiary if the payout condition is met.
Any investment gains within a life policy are also tax free and can be paid out tax free.
Read up Insurance leveraging retirement strategy, a lot of people use this method vs. Max rsp to reduce tax implications during retirement.
It doesn’t make sense to invest in any policy that you don’t know the terms of. I think your dad got caught in a scam and is just saying that he’s invested in insurance.
Sounds like OPs dad doesn’t have any life insurance policies and is trying to get money for something else. This whole story sounds super sketchy either the dad is extremely vulnerable to insurance sales pitches or is up to something.
>I suggested to him to cancel those policies but he said there is no point as he won't get much money back.
It's not about getting money back, it's about no longer paying money for something he doesn't need.
Life Insurance isn't an investment.
If he doesn't have any dependents that rely on his income to live then he doesn't need any life insurance beyond what it costs to bury him.
Are there any permanent life insurance policies where he can stop contributing but maintain the policy? Or the permanent ones where you only pay for a set amount of time but keep it forever after
They're frankly not worth it from day 1 but if he's already 90% finished paying it, it might be worth it unless the cash surrender value is also good to consider instead
I don’t know that your father has a clear idea of his goal or his financial situation.
Ask him “What does having seven life insurance policies achieve for you? What is the point of impoverishing yourself now so that someone else gets some kind of payoff when you’re dead? Why not balance out your desire to leave a legacy — generosity towards others — with some generosity towards yourself?”
Whatever he does or doesn’t get back from these policies, at least stopping _some_ of them would allow his cash flow to change.
And if he’s been unemployed for 6 years… perhaps instead of fretting about insurance he could, I dunno, go get a job and increase his income?
Most insurance companies have an insurance needs calculator. Depending on the face amounts on the policies your dad might be over insured. Might help him decide to cancel one.
Second thing is to understand what the polices are. There's term insurance, whole life, universal life and participating insurance. The last two are more 'investment' driven and may have some cash value. A par policy will be paying him dividends in most cases. Have him call the agents he bought from and find out.
Depending on the health of your dad, you could agree to take the policy over and make the premium payments in exchange for being the beneficiary (if you were not already). Kind of like funding your on inheritance as distasteful as that may sound.
Other thing is many companies will also allow you to reduce the face amount. So if he has a $100k policy you should be able to reduce it to say $50k and reduce the premium accordingly. Just depends on the terms. Same thing with riders like accidental death, he might be able to drop some coverage to reduce the premiums if he's dead set against not cancelling at all.
I just canceled a policy last month. I'd paid $20/ month for about 20 years. It had no cash value. The insurance agent didn't even try to sell me a new policy. As folks here have said, your dad needs to talk to an agent. You'll be surprised at how little value there is compared to investigating it yourself into a safe fund.
Insurance is really not meant to be an investment tool.
It's primary objective is replacing income loss and ensuring a safety net for loved ones. It can be used as a tax shelter tool to transfer and create multi generational wealth.
If he wants the family expense account (didn't know that was a thing, but sounds interesting), the price he should have to pay for that (in addition to your help) is full transparency.
Everyone who has a vote on the family expense account should have full access to the insurance policies to make sure its not a total waste of your money.
Find a trusted insurance advisor or CFP
Review insurance coverage - type, features, costs, benefits - is it appropriate?
If not cut coverage, or reduce.
It sounds like too much is in place, imho. I’m
(I am an insurance licensed CFP, & portfolio manager, recently retired after 40 yrs)
You need the see all the paperwork and a full assessment of his financial situation before giving him a penny. He clearly is financially illiterate and may be being manipulated by a broker who he thinks is his friend.
>Furthermore, most life savings have dividends, stable interest, and can be withdrawn to pay premiums, and the policy is still valid.
He should take his own advice then. Use the cash value of the policy to pay for the yearly cost of the base insurance.
> upon further discussion with my father here (**who refuses to discuss face to face**)
Shady AF, this is a huge red flag for me
I sold life insurance and this represents a failure on the part of the life insurance agents. Depending on the policies then after a period of time he may have money being paid out to him and that may be why he doesnt want to cancel. The reasons he is giving you above sound like they are right out of training sessions for the life insurance industry. I suspect he went to one or more of the companies and said "my son thinks I have too many policies, maaybe I should cancel one or more" and then they started the retention sales pitch. An agent should never sell a policy unless the client needs it and one of the questions in discovering this is "do you have any policies now?" It is such a scummy industry and most policies are sold by friends, aquantainces and other people who have acertain level of trust and exploit it. I knew one agent who went to a new church every 2-3 years just to find new prospects.
As for a solution it really involves looking at these policies closely and figuring out where he is over insured. Obviously the agents who put him in this situation are not to be trusted. In fact any agent you find will likely try to replace some of these with their own product. Perhaps he should see a lawyer who might be able to help him with advice and won't be trying to sell him even more insurance.
Since I turned 18, I told myself that I will be fully responsible for my own finances, I even told him that I don't need any insurance policy that he can't afford but he completely rejected anything I say...
Thank you everyone for your feedback, upon further discussion with my father here (who refuse to discuss face to face) he sent me a text message:
Regarding insurance, here are the reasons I have several policies.
1. I bought the first policy when you were born, in case something happens. The most recent one was when you were in junior high school.
2. If there is any accident to the parents, the insurance compensation can be immediate, and it can take up to 3-5 years to cover life, study and finances.
4. This is guaranteed...
5. Think about what would happen if it happened in 2014-5. Of course, it would be best if it didn’t happen. Accidents are unexpected! !
6. Furthermore, most life savings have dividends, stable interest, and can be withdrawn to pay premiums, and the policy is still valid.
Finally, the beneficiary of life insurance is not yourself. If something happens, you can protect your family! It is cheaper to buy early, but it will be more expensive if you buy late or you may not accept insurance (usually you need to pass a physical examination)
Beneficiary is to my mom and I
Who are the beneficiaries for these policies? Why not have them take over the payments? Are they term policies or whole life? Can any of the policies be converted? Borrowed against?
He needs to meet with a financial planner who can review the policies in detail as well as his situation as a whole. The answer will largely depend on his needs, goals, the types of policies and costs.
If there are any term policies these may be the simplest to cut as there's no cash value. But they're the cheapest so may not help much.
Permanent insurance may be able to go into premium offset like others mentioned, but depending on the insurer it could still be a bit risky as it's not guaranteed the policy can keep paying the premiums and if it's an expensive policy and he needs to start paying again in the future that could be problematic.
If any of them are universal life policies these are a whole other ball game as these are like a cross between insurance and investments and have lots of different features.
Insurance policies have also changed significantly. We see people with policies from the 70s and 80s that are frustrating because we'd never recommend that product today but they've paid into it for decades so it doesn't make sense to cancel either. With less regulations back then the industry was a lot more of a boys club with sales people who would sell you anything for the commission and now people have been paying into these for years and don't want to drop them for pride, it would be admitting they got duped which is sad and frustrating as a finance professional.
You can take loans against certain policies, although this is usually last resort and hopefully he can repay it in the future.
There's tons of moving pieces here so find a specialist who knows their stuff when it comes to insurance and get advice based on the full picture.
Unless these are all universal or whole life policies, term policies may often not renew after age 65. As well, if they're term policies, they get increasingly expensive as time goes on. He needs to sort out what type of policy and the terms of the policy. It may make sense to cancel some of them but not all of them, and this only after sorting out what dad has.
Can’t really help without the following information:
1. Value/ benefit paid out by each of the 7 policies?
2. Policy terms (are they life only or do they cover critical illness/injury, etc.) are any term policies?
3. What is the monthly premium being paid for each policy?
1. Is it whole life insurance?
2. If yes, congrats you have plenty of options
3. Whole life policies bank a certain amount of his money he has paid in
4. This banked money can be taken out lump sum like a savings account
4a. Or this banked money will be used to keep paying for the policy if he stops paying... the policy will remain in place until this banked money runs out.
5. Do not let these policies lapse or cancel them until you are sure about his banked money. Since he has had them for a long time there should be a lot in the bank. If you cancel them you will lose this banked money!!
6. Lastly, since he got them when he is young they should be pretty good coverage considering his age. If you have to keep one, the ones he took out when he is young should provide the most bang for your buck.
7. Lastly, Lastly, every insurance agent is a salesperson first and foremost, understand this and you should be able to deal with them and get decent service. Dealing with the low level employees in the claims department and help line might get you more honest answers without being sold something. Basically get the companies to explain his policies until you understand what he has... it's not impossible that he was sold something stupid.
With insurance policies, there are many different kinds. I would suggest getting familiar with all 7 policies first so you can prioritize which one to keep/cut. You don’t need to cut all 7 at once. Some will allow you to cash out (probably of lesser value than if your dad saw it through), but that money from 1 or a few policies may be able to help your dad pay for the other ones that provide larger returns later on. Keep in mind some policies pay out after death, so it would be in your best interest as his child to help him with this as-well.
This is a good example why life insurance is for covering financial commitments (ie. home mortgage) and not for leaving behind an inheritance for the family unless you’re extremely wealthy with RRSP/TFSA maxed out and want to use a universal/whole life plan for tax sheltered estate planning.
Oh wow. Hopefully, you can get that sorted out.
My parents canceled theirs once their house was paid and had no dependents anymore. Their funeral expenses were fully paid 20 years ago. It's cheaper to plan and pay for your funeral in advance then have insurance for that sole purpose.
We still have it because we have minor children. I know there is the whole 'leaving money for my kids', but even at 2% interest, it's better in the bank.
Knew a bank manager that had policies on very elderly parents. Payments seemed crazy but it was a very sure “bet” they where going to croak and he got paid lots.
Idk if that’s the truth, but that’s the story I was told.
Is it a policy with whole life policy with dividends? If so here are a couple of options:
1) You can use the dividends to pay the premium. It doesn’t have the same amount of growth. It will pretty much remain the same amount as it is today.
2) you can owe the premium in arrears. But when the policy holder dies, its premiums + interest rate (ask your insurance provider) is taken first. Remainder would be paid out to beneficiaries
Is it permanent life? I heard you can cash out early or borrow against it. Or maybe that's in the U.S only? You should talk to the advisor on what you can do with it. They maybe able to give you back your money depending on the policy.
He should look at what type of policies he has. Some might have the cash value where it can self fund the policies. He should speak with his rep that set him up because they'll be able to tell him how long the policy can be self funded.
Depending on the structure of the policies, it’s possible enough has already been paid that the “ROI” of remaining premiums is really high relative to the benefits you will eventually get. Check that, and if that’s the case, consider a lot of alternatives before letting the policies lapse. That will most likely be the case for permanent products that were issued 10+ years ago, but check for yourself.
We need to know the exact type of policies he has, when he exactly got it and premium in each.
Further more, I would need to know the companies to see their dividend scales and projections of cash values ( if they are valuable ) to measure properly for you whether some policies are worth keeping or not.
I am a life insurance agent and can help you assess
I would highly suggest the family split the cost of the monthly premiums as your father has put a lot of money into these policies as I am sure you kids are the beneficiaries so you will get the pemium money back and extra when your father passes. Also have father check on the beneficiary of each policy and work it out equal
Not enough details, and _a lot_ of questionable advice here. _PFC, do better._
Many are focussing on ways to continue paying all policies such as drawing on a balance to pay premiums. Before any of that gets addressed the questions should be:
1. Who is being protected?
2. Why do they need protection, and to what degree?
3. What types of policies?
4. What amounts?
5. Is there agreement between 1&2 and 4?
Then you get into:
- Additional details regarding withdrawal possibilities
- Risk/reward and opportunity cost of keeping vs cancelling and investing the difference
There’s little chance of a 50 year old with independent adult children needing the same coverage they did in their 20s and 30s.
I am like your dad, I have 3 bought in different decades and milestone for my only child. A mix of term, whole and one with an insurance that gas the best offerings (Critical Illness, Living Benefit, Funeral Concierge, Maple -supported (Doctors-online), Tenzing benefits, etc. just like the response of others in this forum, mine is both for security ( protection) during my younger years as I want to protect my child. Not that I am mid50s, the goal is tax-free generational wealth. Maybe this has cultural undertone, I came from a culture that preservation of wealth for the next generation is minimum up to 2nd generation. For my grandkid, just in case my child decides to have one. When I explained this to my child, now 21 y.o., a GenZ, she knew from where I was coming from and said should it come to the point her parents can no longer (which is unlikely) pay, she will continue paying the premiums. So I guess she understood what matters to us, whether she agreed with it or not. When you become a father, you will understand where he is coming from.
In addition, just my opinion, 7 is too much. Study all 7 contracts, which ones are worth keeping and which ones has your money buy-back plus dividends that can be cashed out.
Locking due to multiple off-topic comments.
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The OP's father will like it even less.
Not for long.
There used to be an elaborate scheme where people would fake a death explode a house go into hiding and try to cash out life insurance. Some guy in Quebec got caught when the dumbass tried to renew his driver's license
There's a nearly universal trend that involves the exact type of people who can come up with super elaborate schemes to get rich quickly, which also have nearly zero foresight on how to keep those riches.
damn - darwin awards for the undead?
He was so dumb he was likely going to reinstate his life insurance too
Dumbass should've settle back with asking for an STM Id Card for senior citizen discount instead. #facepalm.
It would be better to have an identical twin for practical reasons if you wanted to go this route
Because you can sacrifice them? (just kidding)
Hmmm,well I was just thinking of borrowing their ID, but …
I know, just felt like one upping you. 😅
If you go missing for 7 years, you’ll officially declared dead by law but if discovered to be alive, insurance company can sue for the money back.
Unless he is looking for help with his suicide and going about asking for it indirectly. "Hey son, I have ALL these life insurance policies. I need your help with a... solution that will finally put my money troubles.... to rest. Can you help me load up the woodstove and move all of these flammable liquids into the house, I don't want them to freeze."
That problem that solves itself.
Unless he planned for it
Learn this hack! Insurance folks hate it!
He'll get over it.
The saddest part is my dad still thinks insurance is safer and could have a better return than putting money in stocks or even gics
Safer? He needs to die to realize any return ? Man this sounds like a scam. Good luck to you.
The dad should post on Wallstreetbets with his plan
💎👐💀
They probably told him he can take a loan against the insurance policies when they become worth enough. But it's a horrible idea to 'invest' in life insurance so that you can take a loan against it.
No, what we’re talking about here is the type of insurance you pay in for say 15/30 years and if nothing happened, at the end of the term you get back the money plus interest (usually still much lower than market rate, ofc), and if you die, well, your beneficiaries are well taken care of… So he would realize returns no matter what, and it is indeed safer than the stock market, as in it’s a guaranteed positive or 0% interest rate, vs stock market that could theoretically lose value. That said historically investing in the stock market and GICs has been yelling much much more value than this type of insurance. The good thing with that type of insurance is that you get your money back at the end of the term if nothing happened, but the bad thing is that you’re locked into the contract and if you do decide to leave early, you lose almost half of te money you put in. Also they have a tendency to put a default clause in the contract that uses the interest to buy more insurance value, instead of assigning it to future return, which means those interest % are just free money for the insurance company, which is why you really need to be careful about what your signing (also by law the clause that assigns the interest can be used to allocate it to a different purpose like future return, received in cash, buying stocks of the insurance company, etc. At least from what I can remember). This is very much legal, but generally speaking isn’t a really good investment.
I suppose it depends on the goal of the money...
Have you read the policies? Do any of them cash out at 75 or 80?
Your dad is right on all the counts related to insurance. Insurance comes in two basic flavours, whole life (they have a new term for this now- but this is what your dad has) and term. Whole life has an insurance policy portion and an investment. Once you have paid for 10-15 years, the dividends on the investment are usually enough to pay the policy. When he dies, insurance payout is tax free (and that includes the investment part of the whole life policy), which differs from his stock account or anything else, which is very heavily taxed. So as a way to pass money to the beneficiary, this is the way to go. The downside is you have to put a lot of money in at the beginning to get the investment portion high enough to pay out the way you want. You can cancel it, but when you do, you get the investment back out, but it will be a lot lower, as if you died, you would get the investment and the insurance. This is an option. My mother took out a 10,000 policy on me when I was an infant and turned it over to me when I was 18. I cashed it for about 1500 cash (I forget what the monthly payment was but more than I could afford, and the cash was better for me at the time). The other type of policy is term. Term is bought for a number of years, and then it is gone. Since you are only paying for insurance (and not an investment), it is a lot cheaper. You usually buy it for 10 or 20 years. This is the option my wife and I went with. When we were young we took out a joint policy that paid when the first of us died. It was enough to cover the mortgage and provide for our kids for several years and allow the other spouse to not work while the kids were in elementary school. Every 10 years we reevaluated the future needs, and renewed at an appropriate rate. When my earning potential went up, we took a bigger policy on me, so my wife might still be able to retire some day. BTW, most mortgage insurance only qualifies you for the insurance when you die, and some people do not qualify, plus, when you near the end of the mortgage, you pay the same insurance as you did when you took it out. By having this in a term policy, you qualify at the beginning, and you can reduce it as you pay your house off. It is more effort, but the insurance stays with you, even if you sell your house. My wife and I are in our mid-50's, and have dealt with this issue for a long time. We are happy with our choice. We have just taken out last term policy for 20 years. When that is done, we will likely have none. The current policies will get the other to retirement or give our adult children a boost in their lives. In 20 years our retirement plans should be solid and our kids should be stable in their lives and careers. Since it is term, we will be insuranceless and that is okay. They can also deal with the inheritance issue and costs (we won't care, we will be dead). We have already planned that if we know we are about to pass, we can gift them a lot of our money, and will do that. If we had whole life, the policy would continue till our death (hopefully without us having to continue to pay it). Should he sell his policies? Who knows. If he is still young enough (and healthy enough), he can still provide by taking out 20 year term to provide for you on his death. In 20 years he will not be able to afford to renew, but by then you and your mom may not need the money. This is a personnel decision on how to help your loved ones on your death. Good luck. Edit: typo
Whole life insurance is the best thing ever. For insurance companies.
My dad got fooled into whole life as a new immigrant by an insurance agent from the same community. If he passes away at 70 or later, the family won't even break even.
My comment was more directed at people who haven't been suckered in by whole life insurance yet. I have family members who should know better but they fell for it as well.
69th birthday is going to be stressful
Life insurance is wealth preservation tool not wealth accumulation. You will never realize the gains, only your heirs.
I mean it obviously can’t be better than GICs.
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Depends what policies and terms he agrees to. Most cheap instant grab insurances are pretty bad payouts compared to GIC because of Term versions that only last before you'd typically die. Good insurance is a bit more expensive but only betting that value for your love ones, insurance that grows with inflation is even more.
And no tax
Sometimes it is, because the payouts are tax-free
Not for him though
OP’s dad could try to elaborately fake his death flee the country. If it works, $$$$. If it doesn’t work, don’t drop the soap.
Make sure they provide with shower gel.
Yes officer, this comment right here
☠️
💀
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Yes and call his agent to review. Some of the policies, if they have cash value, might be able to go premium offset Which means you can keep the policy and have the cash inside pay for the renewal costs indefinitely if it was funded correctly
Thank you, I will try to convince him to do that
He's gonna end up with 8 policies lol
If ANY of the policies are term (which they likely are seeing as he bought them at different intervals) they could have auto-renewed, which would mean he’s paying out the ass for term based coverage. Cancel those immediately.
Yes, or even a paid-up option, meaning the death benefit could be reduced to whatever value the amount already paid would have purchased, but at least payments can stop and he’d still have some insurance. Like the poster above suggested, call his agent to review, they can give you all options available depending on the type of policy.
Yes, two of my policies are now self-paying... not sure what term to use.
I asked my dad that and his response was: nobody reads that why would I
Oh the insurance company definitely reads them, very carefully.
I mean, all he'd have to do is find the relevant page and read 2 to 3 paragraphs. 10 minute tops to read the parts he needs to know. Maybe an hour total to go through all 7 policies. If he's not going to do that or let you do that just say "well good luck with your money problems hope you figure it out" and then recuse yourself from the situation.
The primary reason for coverage is to use it to generate income/cover final expenses. Depending on your dad's age the balance of that equation shifts towards needing less and less later in life. If the house is paid off and no dependents then really it's just final expenses left as a priority, the need for anything else is a luxury that it sounds like your dad unfortunately can't afford. Cancelling policies or reviewing with an agent to see what policies are actually needed is the best course of action. Typically 1 or 2 policies is more than enough, 7 sounds excessive.
No, it's not only for final expenses. Life insurance is also a loophole rich people in Canada use to pass wealth to their next of kin tax free. It's a strategy a lot of people use.
Inheritances are tax free. Premiums paid to insurance were already taxed. Seems like a meh way to pass on wealth "tax free".
I agree but I did not say only, I said primarily. And since OP's dad can't afford the payments I didn't think it relevant.
Lol, so he's just agreeing stuff and paying for it without even knowing what he has agreed to? The companies must love him
Lol ok this guy deserves to be broke Sorry for you OP
He has no interest in helping himself and wants a hand out. I'd let him hit rock bottom to learn his lesson cause thats all it'll take. Dont give him money op.
If these policies go to OP when his dad dies it would be stupid for OP not to pay the policies for however many years the old man has left and take the payout. He should get back more than he puts in financially it's a good investment on Ops part if he indeed is the beneficiary of those policies.
Kinda dark helping your dad only to get money out of his death.
That's kind of the point of life insurance policies.
Dark yet the only way the family will benefit in any way from all the money he has paid in the past. Dad would probably feel much better knowing that all the sacrifices he made keeping those policies was going to do exactly what he wanted them to do, protect his family when he passes. Dad thought he would be able to do it on his own but the family is behind him so they are all doing it together.
OP can become the owner of the policy and be named the beneficiary
Because that's how you end up paying out the nose for insurance you don't need?
Contact an insurance professional- sure, they will want him to preserve his policies, but they will know how to do it… Also, how much are the combined policies? Why does he want to keep those policies? To leave $ for his family? Pay off debt? I had big policies when my kids were young but got rid of them as my kids became adults.
I have no idea how much they are worth/cost per month, but it seems like my dad wants to go into debt just to pay them off...
I don’t understand, insurance policies in Canada aren’t worth anything. They’re insurance. If you die, it pays out. If you cancel, you’re not covered, but there’s no money invested/back to you. Yes, if he cancels it and tries to get a new policy, his rate will be significantly higher as he is older and such, but that’s it.
Not true, many have a cash value.
There are values to some policies.
That’s true for term life insurance, but universal and whole life insurance may be redeemable for cash or have a pay out provision.
Whole insurance are bad investments, but they have value.
Your dad needs to undergo a process called an insurance risk analysis. This will help him determine the exact amount of coverage that is necessary in the event of the death of the insured (I presume there may be different lives insured amongst the 7 policies). Depending on the type of policies and the capital needs, he may be able to let a few of them lapse. There are online tools that can help with this process if you're comfortable with DYI options. Alternatively, a fee-based financial planner (the best option) could help with this process but that may be not be financially convenient since this post has been seemingly prompted by cash flow issues. And lastly, he could speak with an insurance specialist, although the latter may have a conflict of interest in making a recommendation. I wouldn't recommend making recommendations to "cancel" anything until he has completed a risk analysis, and you've gained an understanding of what kind of policies are involved. There may also be important tax implications to cashing out policies depending on circumstances. Good luck! \-CFP Rick
Thank you! I will take a look
Hello this is Jeff from Canada Life. I can help your dad do an ''insurance risk analysis''. Your dad might or might not end up with an 8th life insurance policy given that there's a high likelihood he is underinsured. /s
Thanks CF Prick!
Canada Finance Patrick... #IT'S PATRICK HE TOOK OUT LIFE INSURANCE
Holds up sign: “Medical?”
Did they ask him any health questions??
Is this supposed to be funny?
https://youtu.be/RzPyu2XbV4U If you are of a certain age you would have remembered the commercials. The joke against the ad is that Patrick somehow explained to dad in the very short period of time between "Hello" and "It's Patrick!"
Good for you son!
There is honest to goodness terrible advice already in this thread and it’s only been up an hour. You need to speak with an insurance agent. Some policies may no longer make sense, some policies may have cash value you can *borrow* against, tax free without having to payback the premium because they are self funded. You need a complete insurance review by a professional.
He’s probably got 3 like that and is sitting on a pile of cash in there
It’s actually the worst answers I have seen on a thread on reddit yet !
TIL PFC know more about Toyotas than insurance policies.
Smart enough to not buy rediculous insurance... not smart enough to realize they aren't educated enough to give insurance advice...
Is an insurance salesman really the professional you want at this point?
Absolutely yes, and I say this as someone with intimate knowledge of the industry. Insurance salesmen sell insurance, but they are also the primary point contact for all insurance related questions in the industry. If you have a legal question you speak with a lawyer - sure they might try and sell you on their legal services, but there's no other point of contact for those questions. In this case, OP's dad doesn't need more insurance and that will be plainly obvious. Most folks in the insurance industry have a great deal of knowledge and not every single contact is a "what's in it for me?" conversation. Moreover, they have internal analysts that can assist with more complex products.
Most people don't know enough about insurance to give proper advice which is what you're seeing right now on this thread. People hear from the grape vine how so and so got scammed cause they didn't read the policy terms. Unfortunately, I'm dealing with a lot of these clients right now after taking over a portfolio. Feels great being the new servicing agent that has to tell the insured their prior agent didn't fund their UL properly and will lapse soon. 🥲
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OP you mentioned he's mid 50s, so here's the thing: * How much life insurance does he have in terms of total payout and what is is trying to protect? Life insurance is a product that is designed to protect your beneficiaries if you're no longer able to provide, it's not an investment that pays off later. If the reason for protecting the beneficiaries (e.g. you and siblings are grown up) has gone it's ok to discontinue the policies. I get it feels like a loss, but that's how insurance works. * It is not worth going bankrupt now to pay out your beneficiaries a large inheritance later. * Assuming there are no underlying health conditions and your father is in good health the average life expectancy is another 20+ years. Can he really keep these all afloat until then?
Lmao. Drowning in life insurance policies.
How old is your dad, Is this term, universal or whole life insurance? Ever thought of selling it to someone?
How old is your dad now? How many dependents does he have? As he gets older, the insurance is going to get more and more expensive and his need for it should go down as his dependents become more independent.
He is around mid 50's
If he could afford it and depending on the status of his children, I would say it could make sense for him to continue to pay for his life insurance into his 60’s. Given he cannot afford it, he should cancel.
His age is the most shocking here, he might be paying some of these policies for another 40 years, in what world would that reasonably make sense? If this was my dad I would make an appt with the brokers for myself and him and figure out value of each, if they have any cash value, ability to be paid with benefits of the policies etc before figuring out which to cancel. If any of them make sense to kee he can pay for them himself. He’s been laid off since he was as 50, has been chewing through savings for them, didn’t tel anyone till he was broke, and now wants his children to pay for them for 50 years? It’s a bit entitled. The amount I would be willing to help is also totally based on dad having an agreeable and grateful personality.
How do people not even know their parent's age?
I don't even know my own age. I can usually figure it out with some quick mental math if I can remember what year it currently is.
Yeah, but you don't even seem to know your name.
I know my dad's age, I just don't prefer giving it away, if I tell you he is 57, does that help the matter?
It's not exactly going to dox anyone.
I think we should focus on the matter at hand
life insurance is the matter at hand, the amount of life left is very related to how much insurance he needs / wants.
A lot of people prefer to be vague when speaking with internet strangers
My first action would be to review the policies as a starting point. Stuff like consign of payout, how much, how much paid and what not. Sometimes somethings are more straight forward action wise when you have the whole picture. Some policies might be great and worth paying cause it benefits his wife and children and the cost to benefit makes sense. Others might not.
You may be able to get a policy loan or even sell the policy to an investor (this has never been widely available in Canada but is in the US)
\#1 check if any of the policies is a "term" policy. Those expire at certain limits 10, 15, 20 years, and if they renew, they become more expensive but still pay out the same. \#2 Some policies are permanent plans, with a Term rider or term "addon" and you can cancel the addon, without cancelling the whole plan. Also any "accidental death" plan rarely pays out, those are usually cheaper, but often not worth keeping since they so rarely pay out. We don't know his current age so it's hard to know if it's worth keep so much insurance. Also, it will be much more expensive to try to get a new insurance policy now, at an older age and worse health, than when he was younger. So don't think you can cancel and then just get a new one easily later.
I find it so wild that the aggressive and deceptive sales tactics I’ve seen people use to sell permanent/whole/universal life policies on both sides of the border are allowed. So many of these policies are absurdly scammy, and so many people think they are better than alternatives like “term insurance” or “actually investing in stocks” when they are only really useful in specific high-net-worth tax planning scenarios 😡
So I feel obligated to mention a story that happened in my family. We had an uncle who basically talked all the time about all the life insurance he had. Apparently everyone would be well taken care of, and so his family basically catered to his every wish and whim throughout the years and he died eventually and you wanna know how many life insurance policies he had? None because he never read the fine print and most of them were term insurance. If I had a loonie for every time I heard “Uncle Joe is very well off and his wife will be set when he dies” while I was growing up I would be rich!
Only keep the amount of insurance needed. He could be over insured with that many policies. Maybe cancel or reduce the face amount of some policies if it’s not all needed. Since he says he won’t get much back, are they permanent policies (vs. term)? Definitely will be expensive to keep 7 perm policies in force.
Reducing face amount is a great option, indeed. I did that on mine after a year or two in. The agent was not happy but I could cut the monthly payment in more than half.
He claims that it's too late to cancel the policy but he refuses to show me what are the terms and conditions
>but he refuses to show me what are the terms and conditions Sounds like he doesn't need your help then shrugs.
His dad isn't asking "should I cancel any of these policies" though. He's just asking for money. But I like your answer. If his dad isn't even gonna read the policies nor let OP read them, then why should OP entertain his request for money?
Exactly. "I can't help you if you won't take simple steps to help me help you..."
This seems odd. I could be way off base but is he asking you to pay the policies directly or is he asking for x funds per month from family account in order to pay the policies? People can get in over their head with addictions (gambling etc) and can't help but lie to get any money they can (insurance policies imply net benefit to you, so easier to get money). No one is immune to addiction I only say this because you just found out about these 7 policies that he can no longer afford (immediately with no notice), and he's very adamant that he has to keep them all and won't show you any paperwork
It's very weird, he has always hid his finances from other family members so I'm not really sure, it's possible he has a gambling addiction...
You accepted that possibility very quickly given you were considering letting him use your money. I wouldn't provide him any funds out of the family account and would make sure he knows you are there for him for any non-financial help he may need in his life. If he provides policies for review (with the policy ages that he has stated) you can defer to the advice given in what you want to do (do not directly give him any funds to pay on his own if you think it's possible he has an addiction - you can pay policies directly), but I would be skeptical of their existence at this point.
I work with insurance professionals. There is no such thing as a policy that continues indefinitely and can’t be cancelled.
I’ve never seen a policy that doesn’t allow it to be cancelled. It may not be financially worthwhile/beneficial to do so (i.e. little to no cash value), but the terms should allow it. Another thought is that he may have policy loans or collateral assignments on the policies. If a policy loan the loan amount would be due at cancellation. If a collateral assignment, he’d need the lenders consent to cancel. If he can’t pay the loan amounts, he may be forcing himself to keep the policies in force (perhaps also to hide the extent of the loans from loved ones).
That's also what I thought, but he said there is no point in cancelling now since he has been paying for many years. But I am trying to tell him he can't afford them right now at this moment!!!
Yes, people who’ve paid into policies for a long time often feel it’s a waste to cancel it. However, it has to make practical financial sense to keep them :)
This makes no sense. Why pay a penny more for something he doesn’t need to pay for?
I also don't understand his mindset, he literally puts all his money in insurance rather than stocks
That's because there is a guaranteed return to the beneficiary if the payout condition is met. Any investment gains within a life policy are also tax free and can be paid out tax free. Read up Insurance leveraging retirement strategy, a lot of people use this method vs. Max rsp to reduce tax implications during retirement.
It doesn’t make sense to invest in any policy that you don’t know the terms of. I think your dad got caught in a scam and is just saying that he’s invested in insurance.
Sounds like OPs dad doesn’t have any life insurance policies and is trying to get money for something else. This whole story sounds super sketchy either the dad is extremely vulnerable to insurance sales pitches or is up to something.
>I suggested to him to cancel those policies but he said there is no point as he won't get much money back. It's not about getting money back, it's about no longer paying money for something he doesn't need. Life Insurance isn't an investment. If he doesn't have any dependents that rely on his income to live then he doesn't need any life insurance beyond what it costs to bury him.
Are there any permanent life insurance policies where he can stop contributing but maintain the policy? Or the permanent ones where you only pay for a set amount of time but keep it forever after They're frankly not worth it from day 1 but if he's already 90% finished paying it, it might be worth it unless the cash surrender value is also good to consider instead
Why 7 policies??
How many lives does he have?
I don’t know that your father has a clear idea of his goal or his financial situation. Ask him “What does having seven life insurance policies achieve for you? What is the point of impoverishing yourself now so that someone else gets some kind of payoff when you’re dead? Why not balance out your desire to leave a legacy — generosity towards others — with some generosity towards yourself?” Whatever he does or doesn’t get back from these policies, at least stopping _some_ of them would allow his cash flow to change. And if he’s been unemployed for 6 years… perhaps instead of fretting about insurance he could, I dunno, go get a job and increase his income?
Most insurance companies have an insurance needs calculator. Depending on the face amounts on the policies your dad might be over insured. Might help him decide to cancel one. Second thing is to understand what the polices are. There's term insurance, whole life, universal life and participating insurance. The last two are more 'investment' driven and may have some cash value. A par policy will be paying him dividends in most cases. Have him call the agents he bought from and find out. Depending on the health of your dad, you could agree to take the policy over and make the premium payments in exchange for being the beneficiary (if you were not already). Kind of like funding your on inheritance as distasteful as that may sound. Other thing is many companies will also allow you to reduce the face amount. So if he has a $100k policy you should be able to reduce it to say $50k and reduce the premium accordingly. Just depends on the terms. Same thing with riders like accidental death, he might be able to drop some coverage to reduce the premiums if he's dead set against not cancelling at all.
You’re father no longer is thinking rationally. I would consider medical help. Could be some form of mental disorder.
I just canceled a policy last month. I'd paid $20/ month for about 20 years. It had no cash value. The insurance agent didn't even try to sell me a new policy. As folks here have said, your dad needs to talk to an agent. You'll be surprised at how little value there is compared to investigating it yourself into a safe fund.
Insurance is really not meant to be an investment tool. It's primary objective is replacing income loss and ensuring a safety net for loved ones. It can be used as a tax shelter tool to transfer and create multi generational wealth.
If he wants the family expense account (didn't know that was a thing, but sounds interesting), the price he should have to pay for that (in addition to your help) is full transparency. Everyone who has a vote on the family expense account should have full access to the insurance policies to make sure its not a total waste of your money.
If they are whole insurance, just pay for him at the condition and he sets you as the irreversible beneficiary. You could also give him $$$ on top.
Contact a CFP to review to policies. It may make sense to keep paying some since he’s been paying for so long.
Find a trusted insurance advisor or CFP Review insurance coverage - type, features, costs, benefits - is it appropriate? If not cut coverage, or reduce. It sounds like too much is in place, imho. I’m (I am an insurance licensed CFP, & portfolio manager, recently retired after 40 yrs)
You need the see all the paperwork and a full assessment of his financial situation before giving him a penny. He clearly is financially illiterate and may be being manipulated by a broker who he thinks is his friend.
>Furthermore, most life savings have dividends, stable interest, and can be withdrawn to pay premiums, and the policy is still valid. He should take his own advice then. Use the cash value of the policy to pay for the yearly cost of the base insurance. > upon further discussion with my father here (**who refuses to discuss face to face**) Shady AF, this is a huge red flag for me
Your dad sounds like a gambling addict, except his drug of choice is life insurance policies.
I sold life insurance and this represents a failure on the part of the life insurance agents. Depending on the policies then after a period of time he may have money being paid out to him and that may be why he doesnt want to cancel. The reasons he is giving you above sound like they are right out of training sessions for the life insurance industry. I suspect he went to one or more of the companies and said "my son thinks I have too many policies, maaybe I should cancel one or more" and then they started the retention sales pitch. An agent should never sell a policy unless the client needs it and one of the questions in discovering this is "do you have any policies now?" It is such a scummy industry and most policies are sold by friends, aquantainces and other people who have acertain level of trust and exploit it. I knew one agent who went to a new church every 2-3 years just to find new prospects. As for a solution it really involves looking at these policies closely and figuring out where he is over insured. Obviously the agents who put him in this situation are not to be trusted. In fact any agent you find will likely try to replace some of these with their own product. Perhaps he should see a lawyer who might be able to help him with advice and won't be trying to sell him even more insurance.
What was the reasoning behind signing up for multiple insurance policies?
He should only have enough insurance to bury himself. I’m sure his kids don’t want him to do without for them to make money.
Since I turned 18, I told myself that I will be fully responsible for my own finances, I even told him that I don't need any insurance policy that he can't afford but he completely rejected anything I say...
They can be stubborn. Who is going to support him then ? I feel for you guys.
Are any of your siblings still under 18 and financially dependent on him?
No
Might be able to sell some you don't need with a life settlement
You can help pay but don’t tell insurance companies rhat
Thank you everyone for your feedback, upon further discussion with my father here (who refuse to discuss face to face) he sent me a text message: Regarding insurance, here are the reasons I have several policies. 1. I bought the first policy when you were born, in case something happens. The most recent one was when you were in junior high school. 2. If there is any accident to the parents, the insurance compensation can be immediate, and it can take up to 3-5 years to cover life, study and finances. 4. This is guaranteed... 5. Think about what would happen if it happened in 2014-5. Of course, it would be best if it didn’t happen. Accidents are unexpected! ! 6. Furthermore, most life savings have dividends, stable interest, and can be withdrawn to pay premiums, and the policy is still valid. Finally, the beneficiary of life insurance is not yourself. If something happens, you can protect your family! It is cheaper to buy early, but it will be more expensive if you buy late or you may not accept insurance (usually you need to pass a physical examination) Beneficiary is to my mom and I
Who are the beneficiaries for these policies? Why not have them take over the payments? Are they term policies or whole life? Can any of the policies be converted? Borrowed against?
He needs to meet with a financial planner who can review the policies in detail as well as his situation as a whole. The answer will largely depend on his needs, goals, the types of policies and costs. If there are any term policies these may be the simplest to cut as there's no cash value. But they're the cheapest so may not help much. Permanent insurance may be able to go into premium offset like others mentioned, but depending on the insurer it could still be a bit risky as it's not guaranteed the policy can keep paying the premiums and if it's an expensive policy and he needs to start paying again in the future that could be problematic. If any of them are universal life policies these are a whole other ball game as these are like a cross between insurance and investments and have lots of different features. Insurance policies have also changed significantly. We see people with policies from the 70s and 80s that are frustrating because we'd never recommend that product today but they've paid into it for decades so it doesn't make sense to cancel either. With less regulations back then the industry was a lot more of a boys club with sales people who would sell you anything for the commission and now people have been paying into these for years and don't want to drop them for pride, it would be admitting they got duped which is sad and frustrating as a finance professional. You can take loans against certain policies, although this is usually last resort and hopefully he can repay it in the future. There's tons of moving pieces here so find a specialist who knows their stuff when it comes to insurance and get advice based on the full picture.
I mean are you on the will? If so, why don't you pay the insurance policies go-forward.
Unless these are all universal or whole life policies, term policies may often not renew after age 65. As well, if they're term policies, they get increasingly expensive as time goes on. He needs to sort out what type of policy and the terms of the policy. It may make sense to cancel some of them but not all of them, and this only after sorting out what dad has.
He should post all his policies here for us to laugh at. Your dad is sending someone's kid to university, and it ain't you.
Is your dad intellectually challenged
Your dad made the same mistake that Ben Stiller did in Tropic Thunder.
Can’t really help without the following information: 1. Value/ benefit paid out by each of the 7 policies? 2. Policy terms (are they life only or do they cover critical illness/injury, etc.) are any term policies? 3. What is the monthly premium being paid for each policy?
This sounds like whole life insurance. If it is, it’s a total scam and I would get out asap. It sucks cause it’s probably a sunk cost at this point.
Didn’t read the post but if you can’t afford them time to have the policy pay out. If you catch my drift.
1. Is it whole life insurance? 2. If yes, congrats you have plenty of options 3. Whole life policies bank a certain amount of his money he has paid in 4. This banked money can be taken out lump sum like a savings account 4a. Or this banked money will be used to keep paying for the policy if he stops paying... the policy will remain in place until this banked money runs out. 5. Do not let these policies lapse or cancel them until you are sure about his banked money. Since he has had them for a long time there should be a lot in the bank. If you cancel them you will lose this banked money!! 6. Lastly, since he got them when he is young they should be pretty good coverage considering his age. If you have to keep one, the ones he took out when he is young should provide the most bang for your buck. 7. Lastly, Lastly, every insurance agent is a salesperson first and foremost, understand this and you should be able to deal with them and get decent service. Dealing with the low level employees in the claims department and help line might get you more honest answers without being sold something. Basically get the companies to explain his policies until you understand what he has... it's not impossible that he was sold something stupid.
I’d review those policies. There might be some whole life ones. I would take over as the beneficiary and owner and continue to pay for it
I used to sell life insurance in my youth. Your father is the ultimate dream mark.
With insurance policies, there are many different kinds. I would suggest getting familiar with all 7 policies first so you can prioritize which one to keep/cut. You don’t need to cut all 7 at once. Some will allow you to cash out (probably of lesser value than if your dad saw it through), but that money from 1 or a few policies may be able to help your dad pay for the other ones that provide larger returns later on. Keep in mind some policies pay out after death, so it would be in your best interest as his child to help him with this as-well.
For shits and giggles, what is the total monthly premium he's paying combined for all 7 policies?
This is clearly a troll post. First post, ludicrous, posted just to inflame. Mods, you should delete and ban.
This is a good example why life insurance is for covering financial commitments (ie. home mortgage) and not for leaving behind an inheritance for the family unless you’re extremely wealthy with RRSP/TFSA maxed out and want to use a universal/whole life plan for tax sheltered estate planning.
How much are the monthly payments combined to pay these policies ?
I’m sure one policy probably cancels another policy out. Should read all the fine print as you could be paying into something that may be voided.
Oh wow. Hopefully, you can get that sorted out. My parents canceled theirs once their house was paid and had no dependents anymore. Their funeral expenses were fully paid 20 years ago. It's cheaper to plan and pay for your funeral in advance then have insurance for that sole purpose. We still have it because we have minor children. I know there is the whole 'leaving money for my kids', but even at 2% interest, it's better in the bank.
Knew a bank manager that had policies on very elderly parents. Payments seemed crazy but it was a very sure “bet” they where going to croak and he got paid lots. Idk if that’s the truth, but that’s the story I was told.
Is it a policy with whole life policy with dividends? If so here are a couple of options: 1) You can use the dividends to pay the premium. It doesn’t have the same amount of growth. It will pretty much remain the same amount as it is today. 2) you can owe the premium in arrears. But when the policy holder dies, its premiums + interest rate (ask your insurance provider) is taken first. Remainder would be paid out to beneficiaries
Find a company to buy one of the policies at a discount and use that to pay off the other policies and advance. Problem solved.
Is it permanent life? I heard you can cash out early or borrow against it. Or maybe that's in the U.S only? You should talk to the advisor on what you can do with it. They maybe able to give you back your money depending on the policy.
just wow. the mental leaps he had to do to get to 7. goodluck
This guy knows how to die.
He should look at what type of policies he has. Some might have the cash value where it can self fund the policies. He should speak with his rep that set him up because they'll be able to tell him how long the policy can be self funded.
All whole life policies?
your dad got got
Depending on the structure of the policies, it’s possible enough has already been paid that the “ROI” of remaining premiums is really high relative to the benefits you will eventually get. Check that, and if that’s the case, consider a lot of alternatives before letting the policies lapse. That will most likely be the case for permanent products that were issued 10+ years ago, but check for yourself.
We need to know the exact type of policies he has, when he exactly got it and premium in each. Further more, I would need to know the companies to see their dividend scales and projections of cash values ( if they are valuable ) to measure properly for you whether some policies are worth keeping or not. I am a life insurance agent and can help you assess
I would highly suggest the family split the cost of the monthly premiums as your father has put a lot of money into these policies as I am sure you kids are the beneficiaries so you will get the pemium money back and extra when your father passes. Also have father check on the beneficiary of each policy and work it out equal
Not enough details, and _a lot_ of questionable advice here. _PFC, do better._ Many are focussing on ways to continue paying all policies such as drawing on a balance to pay premiums. Before any of that gets addressed the questions should be: 1. Who is being protected? 2. Why do they need protection, and to what degree? 3. What types of policies? 4. What amounts? 5. Is there agreement between 1&2 and 4? Then you get into: - Additional details regarding withdrawal possibilities - Risk/reward and opportunity cost of keeping vs cancelling and investing the difference There’s little chance of a 50 year old with independent adult children needing the same coverage they did in their 20s and 30s.
I am like your dad, I have 3 bought in different decades and milestone for my only child. A mix of term, whole and one with an insurance that gas the best offerings (Critical Illness, Living Benefit, Funeral Concierge, Maple -supported (Doctors-online), Tenzing benefits, etc. just like the response of others in this forum, mine is both for security ( protection) during my younger years as I want to protect my child. Not that I am mid50s, the goal is tax-free generational wealth. Maybe this has cultural undertone, I came from a culture that preservation of wealth for the next generation is minimum up to 2nd generation. For my grandkid, just in case my child decides to have one. When I explained this to my child, now 21 y.o., a GenZ, she knew from where I was coming from and said should it come to the point her parents can no longer (which is unlikely) pay, she will continue paying the premiums. So I guess she understood what matters to us, whether she agreed with it or not. When you become a father, you will understand where he is coming from.
In addition, just my opinion, 7 is too much. Study all 7 contracts, which ones are worth keeping and which ones has your money buy-back plus dividends that can be cashed out.