Hello,
I am desperately trying to help my family with making better informed financial decisions. My father (now in his 70s) purchased a Legacy Secure Universal Life policy through Lincoln Benefit almost 20 years ago. It has a $1M death benefit/face value and riders for Liquidity Guarantee and Coverage Protection. As of the last statement date (9/23), the surrender charge is roughly $10k, the policy value is $0, outstanding loans are $0, and net surrender value is $0.
He bought the policy when he had a medical scare and wanted to ensure his young family would be protected. His current health is generally good, but he has conditions like diabetes/heart disease that may hurt his insurability. From what I understand, he paid the premiums on the policy for a number of years, until there was enough paid into the policy to essentially cover the premiums for a period of time, and then stopped paying. We recently received a letter stating the following:
"We are writing to let you know that your net surrender value is not sufficient to cover all of the monthly insurance costs that are currently due for your policy. Therefore, your policy is currently in its grace period. Your policy also contains a Coverage Protection Rider. In addition, you currently have a shortfall in the Coverage Protection Account (CPA) value defined in this rider. This is important because the lapse coverage benefit provided by this rider is currently not available.
Unless you pay the amount listed below by the end of the grace period, this policy will terminate at the end of the grace period. If we do not receive the amount of [around $7,000], your policy will terminate [later this month]."
Based on my understanding, we would need to pay $7k to keep the policy active, and continue paying around $5k a year in premiums until he passes to maintain the policy. It's a large amount of money, and we're unsure about whether it's worth continuing. Based on his own math, he's paid over $50k into the policy to date, so there's a bit of "sunk cost" concern at play regarding letting it lapse.
We are trying to determine the following:
1. What are our options with this policy? I assume it's either continue paying it, cancel it, or maybe somehow sell it?
2. If we keep it, is it a worthwhile investment?
I would GREATLY appreciate your advice.
I am desperately trying to help my family with making better informed financial decisions. My father (now in his 70s) purchased a Legacy Secure Universal Life policy through Lincoln Benefit almost 20 years ago. It has a $1M death benefit/face value and riders for Liquidity Guarantee and Coverage Protection. As of the last statement date (9/23), the surrender charge is roughly $10k, the policy value is $0, outstanding loans are $0, and net surrender value is $0.
He bought the policy when he had a medical scare and wanted to ensure his young family would be protected. His current health is generally good, but he has conditions like diabetes/heart disease that may hurt his insurability. From what I understand, he paid the premiums on the policy for a number of years, until there was enough paid into the policy to essentially cover the premiums for a period of time, and then stopped paying. We recently received a letter stating the following:
"We are writing to let you know that your net surrender value is not sufficient to cover all of the monthly insurance costs that are currently due for your policy. Therefore, your policy is currently in its grace period. Your policy also contains a Coverage Protection Rider. In addition, you currently have a shortfall in the Coverage Protection Account (CPA) value defined in this rider. This is important because the lapse coverage benefit provided by this rider is currently not available.
Unless you pay the amount listed below by the end of the grace period, this policy will terminate at the end of the grace period. If we do not receive the amount of [around $7,000], your policy will terminate [later this month]."
Based on my understanding, we would need to pay $7k to keep the policy active, and continue paying around $5k a year in premiums until he passes to maintain the policy. It's a large amount of money, and we're unsure about whether it's worth continuing. Based on his own math, he's paid over $50k into the policy to date, so there's a bit of "sunk cost" concern at play regarding letting it lapse.
We are trying to determine the following:
1. What are our options with this policy? I assume it's either continue paying it, cancel it, or maybe somehow sell it?
2. If we keep it, is it a worthwhile investment?
I would GREATLY appreciate your advice.
Statistics: Posted by or1on — Wed May 08, 2024 6:26 pm — Replies 9 — Views 417