Ask the Life Insurance Expert

Complex situation ... my ex-husband bought term policy for 500,000 in 1993. He became disabled (on Social Security) in 2005. He says he had the option, upon becoming disabled, to convert the 500,000 term to a 625,000 whole life policy in 2010. Furthermore, the insurer pays the premiums which are about $26,000/year. Does this sound right? My son is the beneficiary. I want to understand this situation but cannot rely on my ex-husband to explain it.

You'd need to examine the language of the life insurance policy to know for sure, but this situation is possible. It sounds like he is taking advantage of two riders:

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  • If he had a "waiver of premium" rider he would not have to pay the premiums after becoming disabled. This is a great rider to have.
  • A "term conversion rider" would let him turn the term policy into a whole life policy. I wouldn't be able to confirm the specific amounts, though.

Here's more on the 9 most useful life insurance riders.

But I have to question the premium on this: $26,000 a year?! He would have paid more in premiums within 20 years than he would get in death benefit with the term life policy.

Last updated: Feb. 17, 2013
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