Dad Suddenly Losing Life Insurance
Hello all, I’m looking for some advice. My dad had a life insurance policy through Baltime Life that he has been paying on for almost 40 years. When he took it out, it had a $75k face value and gained a small cash accrual each year. Several years ago, his agent passed away and so no one was really monitoring his account. He received a call from Baltimore Life earlier this week from his new agent (who has just been assigned) who informed him that when 2027 rolls around, his plan will be worth no money – cash or face. It will essentially just be voided, and all the money that he put into over the years will be for nothing. When asked, the new rep said that his initial plan was “non-guaranteed” and that the cost of the insurance premium per year exceeded the cost of his monthly premium, which is why all his value has been eaten up.
Dad is only 65, and so is anticipating obviously living past 2027 (Lord willing).
The trouble he finds himself in now is that to get a new plan, of course, it will be mega bucks per month. He was paying less than $40/month for the old plan, and now they are quoting him over $150/month for only a $25k policy.
So I have two questions:
Has he lost both the cash AND face value of his initial universal life insurance? I can understand that perhaps his cash value was eaten up by the cost difference, but I don’t understand how the face value is also going to disappear.
Any thoughts on what he can do next? He and my mom are on a fixed income, and adding in a new bill for $150/month isn’t going to be an option. There is only about $1,400 in cash value left at this point in the initial policy.
Thank you for reading this, and thank you in advance for any suggestions or insight you can offer. I am absolutely heartbroken for them watching them try to navigate this. They were told by their rep that they “fell through the cracks” and that in the end it is their fault for not understanding the insurance terms. They were not treated kindly or tactfully at all. They are meeting with their financial advisor next week as well to see what he thinks and to see if he knows anyone locally that they can meet with who specializes in life insurance.
