HuffPosters: Have You Traded Life Insurance For Mortgage Payments? Share Your Stories

The economic crisis has forced Americans to make decisions they never expected to make. In an effort to keep up with his rising mortgage payments, one reader told the Huffington Post that he surrendered his life insurance policy, allowing him to cash in on a fraction of its worth. Not only can he barely make payments anymore, but the security net for his family has disappeared.

New York Life, this reader's insurance company, mentioned that processing his cancellation would normally take 3-5 days, not the 20 business days that he ended up waiting. His story suggests that insurance cancellations might be widespread. We have contacted New York Life and other insurance companies, but none of them have provided statistics on how many people have recently surrendered their claims.

To further illuminate the extent this crisis, we are asking you to tell us your story. Have you turned in your life insurance, or other vital insurance contracts, to pay the bills? Or do you work for a company that carries life insurance products?

Email us at [e-mail] and tell us your story.

When did you cancel your insurance plan? Who was the plan with? How much money has it saved you? Was your insurance company compliant or difficult to deal with? Was your mortgage bill the motivating factor for canceling your insurance?

If you work at a life insurance company, let us know: Has your company released reports of its lapse rates? Is it reporting these rates accurately? Has your company seen a spike in lapse and surrender rates since the economic crisis?

We will pick the most enlightening stories and publish them on The Huffington Post. Please specify in your email if you would like to remain anonymous.

Comments

[FrankenPC]

Strangely enough, I cashed out my 401K's prior to the stock market crash. So, in a strange way, I made out big time.

[AllenKonigsberg]

The claim that he surrendered his life insurance "for a fraction of what it was worth" is misleading, I think. A $5 million policy is not worth $5 million until the insured person dies. Until then, the face value has to be discounted for as many years as he is expected to live, and (similarly discounted) future premiums need to be subtracted as well. The healthier he is, the less the policy is worth, and if he is very healthy, it is even possible that the policy has no value at all.

The vast majority of insurance policies are cancelled before they pay out; about 90% by a study I read a few years ago. The fact that this guy happened to cancel his during a recession doesn't make this totally ordinary decision newsworthy.

[1liberalconspirator]

I thought it was VUL ( Variable Universal Life) insurance. It's a great commission maker (pays a lot to sell) and it is widely known in the industry that some companies push it like crazy. Unfortunately, it is expensive and has no proven exit strategy. Yeah, a lot of these polices are going to lapse-they should never have been sold in the first place.

[Onpage17]

Nothing ticks me off more than paying these credit cards and getting nowhere. The fees they keep tacking on are insane! Seeing the CEO's getting these bonuses is insane! So until something changes with them, I am not paying them. If I need a credit card I buy a preloaded one. They can't do a thing to me. I am self employed so I won't garnish myself, everyone's credit is already in the tank, so who cares about a FICA score. I own my house and lake house and have no intention of selling either so they can put all the liens they want on them. My car is in my business' name and my money is in my kids bank account. I am not a dead beat, and I will be willing to pay what I owe with the interest I contracted with. BUT until they play fair, they can all BITE ME!

[SantaFeStars]

Whoever coined the phrase "the golden years", should be shot!

[thevealchop]

Swapping life insurance for mortgage payments? Ha! I haven't worked in over a year because there are no jobs. I'll be lucky if I can avoid the streets...

[ricksgirl]

HELP!!!!!!!! We are DROWNING in credit card debt.
We did not buy a house we could not afford. We drive old cars.
Our 401K is almost 1/2 what it was.
Bail out credit card debt...not the banks.
We would go out and buy a house, new car. We don't want to declare bankruptsy.
We work hard and make decent money...the cost of living just creeps up on you and before you know it all you are doing is trying to make credit card payments. Its a vicious circle.
Bank liquidity and loaning more money to people isn't the answer...THE COUNTRY IS MAXED OUT.
Why can't they see that?!!
IF THE BANKS GO UNDER I BET WE WOULD STILL HAVE TO PAY OUR CREDIT CARD BALANCES WOULDN'T WE?!!

[thevealchop]

If my bank fails I'm going to dance in the streets!

[sueinmn]

I just received a survey call on behalf of Wells Fargo. I let them have it!! At the end of the survey (she had to get permission) but I demanded a notation.

People are losing their jobs in the millions, losing their homes in the millions, CC rates increasing drastically all the While Wells plans trips and parties to Vegas on our money! I toldl them they way they behave they do not deserve not one good mark!
i told them I will no longer be a customer (presently in good standing) I told them they are no longer worthy of the American people!

They act like not a thing is different today as they were a couple years ago! This is extremely disturbing. NEVER A BANK TOO BIG TO FAIL.

[thevealchop]

Agreed. Wells Fargo is a horrible institution that preys on the poor and middle class. I left them a decade ago for the very reason you just mentioned. I'd love to see that bank go up in smoke...

[leeman79]

This used to be a great country. Our leadership has failed us miserably. I'm very disappointed with the baby boom generation (of which I'm a part) for enabling our leaders to drive us off a cliff.

I read these stories and I think about who we were once. Sad. All I can say is reach out and ask for help. Realize that you're in the same position as millions of other americans, and there is strength in numbers. This will force change. I think it already has.

Be strong brothers and sisters.

[sueinmn]

This is Minnesota but each state should have help to defer the immediate foreclosures. Also I read you need to force your mortgage holder to bring forward the ttitle. Many dont hold the actual lein on the title as they have sold the loans and it may be illegal for them to forglcose. worth looking into!

http://rawstory.com/news/2008/Rep_Foreclosed_owners_should_squat_in_0130.html

MINNESOTA HOME OWNERSHIP CENTER FREE HELP

mediation service to work for you with the banks
kare 11 news
take care of your money

That amounts to 7,364 success stories in 2008,

http://www.kare11.com/money/matters/matters_article.aspx?storyid=539269&catid=329

[sueinmn]

so if they wipe out the middle class and we are all polverty, who will pay to keep their spending alive? the top dont now.what are they thinking? more tax cuts for the top and we will no longer have anything to pay. Who will?

[sueinmn]

sorry wrong post!

[gcallaghan]

I know of a story worse than cashing in one's life insurance. A colleague's brother is severely ill and has foregone treatment so that his family CAN collect his life insurance. I suspect it's not an isolated incident.

[sueinmn]

OMG!

[The 13 Colonies]

I know how that person feels. I worked for almost 30yrs. as a nurse and then I started to get sick.I have used all my credit card for food and cash and to pay for my electric bill. I will have missed my 2nd. mortgage payment on Feb. 17th.I can't sell my house because nobody will buy.Due to so many things wrong, I can nolonger work.I thought I would be able to work until I was 70, but things happen. I don't know what will happen, but the Golden Years are no longer GOLDEN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[sueinmn]

What I think needs to be done is the entire nation of people being effected need to write their stories, their letters directly to Obama. If he begun to receive millions of personal letters like right now, he would have to take a better look at how widespread and personal this has been. Giving more to banks to force them to rewrite the sub prime low income loans is not enough! Sorry low income people you maybe shouldnt have bought a house with such dangerous gambles. (arms)
these stories and homes being lost are middle to upper class familes and we are the tax payers footing this debt! We are the ones now in trouble and need immediate help. no banks is going to rewrite my loan or yours if we are unemployed and not already in foreclosure. (give it a few months more of us will be in forclosure) We are the ones that have forever been the back bone of this country. We are the society forgotten and left behind. Not everyone can possibly keep their homes on unemployment. taxes insurance, wait till they come due. We are the ones, now we need addressing.

[sueinmn]

anyone familiar with Youtube? could we get something set up there to do a mass mailing directly to Obama? Someone somewhere we need to figure out how to get the message to them. NOW WE NEED ATTENTION. jobs creation will not be fast enough, banks are not the answer, people need immediate loan deferment for a couple years. Ive never been on youtube but knows it gets millions of hits.

http://www.whitehouse.gov/contact/
VP Biden
Pres. Obama


The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

[thevealchop]

You are correct. If you have a story like this, write President Obama. I've been thinking of doing the same because he can't very well ignore 50 million letters all saying the same thing. You'd hope, at least...

[pjburke]

"Sorry low income people you maybe shouldnt have bought a house with such dangerous gambles. (arms) "

This igno.rant mythology is so disturbing. It is callous "blame the victim" scapegoating... which while it might make you feel good about yourself to smack others around who don't deserve it, such immature indulgence is distracting and actually makes it harder to solve the real problems.

The vast majority of the mortgage meltdown involved refinancings, not purchases. This means that the people -- the targeted homeowners -- were already doing just fine in paying their payments on time.

The vast majority of toxic refinancings involved predatory lenders whose boiler-room salespeople falsified and fabricated documents, lied through their teeth to homeowners, bribed appraisers, fabricated appraisals... and did whatever else was necessary to close the loans... for which they'd earn, on average, over $3500 -- each -- and that kind of money -- $500,000 a year -- drew in the most ruthlessly unscrupulous of players.

They told people that it would be easy to refinance before the rate adjusted upwards, and the payment got to be too expensive... they said "don't worry, we'll refinance you again any time you want." All on the assumption that home values -- and equity -- would continue to go up forever.

Home values stopped going up. Gasoline went to $4 per gallon. Payments adjusted up. Many people lost jobs. Most of the mortgage who.res were already long gone. "No problem" became "No Way."

[Topaz4608]

No jobs, no health insurance and no life insurance. Double digit unemployment in our county (in Oregon). Cobra was $1500 a month. We bought our home last spring, husband was getting lots of OT, I quit my lower paying job to do the move, and decided to unpack while staying home with our 5 yr old who has Downs Syndrome. Husband was laid off last Nov. Found another job 70 mles away, to be laid off again in Jan. Reports are of 300 aplicants for one single job in this area.


Thankfully, we didn't buy more house than we could afford. I'd spent time last fall filling out all the papers for SSI for our daughter. We get a small amount---and that means a few extras....like daughter's dance class. I feel that my only option for employment is to go back to my old job, now an hours commute away, where I can work varying hours for a small paycheck. Husband is contacting an old employer in the SF Bay Area... a lovely commute! And then I remember the "great depression" when people did pick up and move to where the jobs were.

The future looked good a year ago, two jobs, double insured. Now we are stuck paying a mortgage in an area where jobs no longer exist, praying that husband can go off hid $500 a month medicine without suffering alot of setbacks.

I really like the thought of universal health care right now.

[Wanda Kurtcu]

I reduced the amount of life insurance I've taken out. I've had the other shoe fall since I've lost my home to a short sale. Found out that I have to pay $23k for income tax even though my spouse and I had the max taken out right after my home went into foreclosure. I personally don't know how we are going to pay it. The IRS site says that one should take out a home equity loan to pay. Yeah, right.... If I wasn't so depressed right now that would be funny.

[teaINharbor]

And why should it be this way for the people of the greatest nation in the world? My heart is so heavy for everyone, I see my children struggle and worry about my grandkids as they growup into this lousy situation.
The one thing I do know, we all must pull together and stop this divisional bickering over party lines. Stop threatening each other and blasting fear rhetoric, this division will cause more damage. As much as I dislike the two faced, lying, coniving hypocritical republicans, we need to pull together and show compassion and assistance toward our neighbors.
Peace.

teaINharbor