Can I be dropped from life insurance for no reason without premiums returned?

I have had a Life Ins policy since May 2011. I received a letter stating that I was being dropped. Called company to find out about premiums and was told that there would be no refund. The response I got back was that if I was to pass away in that time they wouldn’t get their money back. What money I was the one paying the premium?

  1. 429 POINTS
    Rich Haag
    President, Rich Haag & Associates, Inc., Clayton, NC
    In 20 years I have never heard of that. The only reason I can see is that after underwriting they discovered a falsity on the application, however they typically only have 2 years after policy issuance to determine that. Unless you have missed premium payments or purchased a policy with variable premiums and returns and have underfunded the policy it would be considered a lapse not being dropped.

    You would have received mailings as well as annual statements that indicated how long the policy would remain in force if you continue to pay the premiums you were paying. My suggestion is to get a professional agent to review your policy. You need to look at the original illustration that was provided to you when you first purchased the policy as well as any statements that the company provided you over the years. This way you can determine if premium payments were insufficient to cover the expenses.
    Answered on March 20, 2015
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  2. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    Since you have had the policy since 2011 you are well beyond the incontestability period. It must be one of the following: You purchase term insurance and the term has run out. (possible but unlikely since you should have a renewal option). You purchased a Universal Life policy and it was underfunded (this may be the most likely reason). A Universal life policy has flexible premiums and some agents, in order to make a sale, have set the premium too low without telling the client. Most agents are honest, but unfortunately every industry has bad apples. If you do not pay enough into a Universal Life Policy, the policy will cancel out. The only other thing it could be is failure to pay the premium within the grace period, usually 30 days. I agree with Rich, you need to take all of the information to a good professional independent life insurance agent and have him review what went on in your case. A life insurance company cannot cancel you for no reason.
    Answered on March 21, 2015
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  3. 10968 POINTS
    Tim Wilhoit
    Owner, Your Friend 4 Life, Brentwood TN
    This sounds like you may have purchased a whole life or universal life insurance policy that the agent may have funded as a "minimum" premium possibly just to make a sale. When the premium is under funded at minimum it can cause the policy to lapse within just a few years. There is no refund because the premiums were used to pay for the actual cost of insurance. This is a shady practice and fortunately agents that do this don't last very long in our industry. It could be something different, but what you are describing sure sounds like that is what happened. You will need to purchase a new life insurance policy now. Be sure and ask family, friends and co workers for referrals of trusted advisors to avoid these types of agents again. I am sorry.
    Answered on March 22, 2015
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  4. 723 POINTS
    Everett Debrow, Jr.
    Principal Agent, Patriarch Associates,LLC, Opelika, Alabama
    I can only think of two reasons that something like this could happen. One is a short-term policy with lack of payment over a significant time frame; that does not sound valid in this case. The second, and more legitimate reason, would be what results from a universal life policy that is funded at the absolute minimum premium. This situation causes a lack of cash value accumulation due to all premium being consumed by the costs of insurance. Unfortunately, it does happen when shady agents are more concerned with making a sale than addressing client needs. Universal life plans are based on flexible premiums. To pay less than adequate premiums allows costs to overrun built-up values, and an immediate payment becomes necessary to continue coverage. Your only option, based on the facts as stated, is to purchase another policy. Before you do, ask family and friends to recommend an agent they would trust to handle their insurance needs. I am so sorry you have had to go through this experience.
    Answered on April 7, 2015
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  5. 7479 POINTS
    Steve Kobrin
    President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
    You know, it sounds a little out of place, but there are reasons for why people lose their life insurance. Do any of these apply to you?

    1. They didn’t pay their premiums.

    2. They were covered under an employer-sponsored plan, and the employer stopped sponsoring that plan.

    3. They were covered under an association plan, and either the association stopped sponsoring the plan, or the carrier dropped the association.
    Answered on April 29, 2015
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  6. 1185 POINTS
    Scott W Johnson
    Manager, Marindependent Insurance Services LLC, California
    I believe that there must be more to this story. You would need to provide the letter that you received for any of us to really understand what has happened. As previously stated it could have been some sort of underfunded cash value policy or perhaps a misstatement in the initial application that was discovered.... Really hard to say without more information.
    Answered on October 3, 2016
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