Wednesday, April 23 2014, 09:23 AM MDT
Life Insurance Policy Suddenly Becomes Worthless
Reported by Matt Gephardt
Produced by Cindy St Clair
(KUTV) Life insurance policies offer piece of mind that loved ones won't be left with a financial burden when you die. But when an Ogden woman says her life insurance policy suddenly vanished, she decided to Get Gephardt.
Pauline Thompsen has planned for her death. To make sure her family is not hit with sudden burial costs, she has been paying on a life insurance policy.
"$240 a year to keep it in service," she says she has been paying.
But after 25 years of paying $240, Pauline says she was surprised to get a letter from the insurance company saying, “Your premium now needs to be increased to $1,680,00."
Pauline says she called to ask why.
"She said, you haven't made any payments in years and years” Pauline says an insurance company employee told her.
On the contrary, Pauline has the checks to prove she has made the annual payments. But worse, Pauline says she was told that her policy is now worthless, which she says is not fair.
"I don't care if it's a bag of peanuts. If I've paid on them for 20 years it ought to be my peanuts," Pauline says.
Pauline's insurance company is the Midland National Life Insurance company. Get Gephardt called but they refused to comment. In a statement, their lawyer Victoria Fimea wrote, "Midland is unable to provide to KUTV information concerning any of our policyholders."
Get Gephardt took Pauline's case to the Utah Department of Insurance and life insurance specialist, Betsy Jerome. But bad news for Pauline says what is happening in Pauline’s case is actually quite common.
"What happens is you pay money in, and it goes into a fund, and that fund earns interest, and out of that fund the cost of insurance, the mortality charges, and expense charges are taken out. So as long as there is money in that fund, the policy stays en force,” Jerome said.
So, what does this all mean for Pauline? Well, after Get Gephardt calls, Pauline got another letter from Midland National. It seems they have decided to make an exception and even though they are under no obligation to do so, they have reinstated Pauline's policy. Midland National has also gone above and beyond to make it right for Pauline who the call a “loyal customer.” They have placed her account in "paid up" status, meaning she doesn't even need to make the $240 annual payments anymore.
(Copyright 2013 Sinclair Broadcast Group)