Terminal Cancer and "Credit Life Insurance" on a new car
joesmith...@earthlink.net
I am in an advanced stage of pancreatic cancer with a poor prognosis.
I do not have a lot of assets. I never could provide a lot to my kids
but was recently told I could get each of them a car using "Credit
Life" during the purchase. The salesman said it was legal and no
problem to buy the cars(3) in my name, defer the initial payments and
the cars would become part of my small estate if I purchased optional
Credit Life Insurance. I am in California. Does this sound ok to any
lawyers out there? I cannot afford to pay for one.
Thank you and God bless,
Joe Smith
TheMightyAtlas
> Hello,
> I am in an advanced stage of pancreatic cancer with a poor prognosis.
> but was recently told I could get each of them a car using "Credit
> problem to buy the cars(3) in my name, defer the initial payments and
> the cars would become part of my small estate if I purchased optional
y
> lawyers out there? =A0I cannot afford to pay for one.
> Thank you and God bless,
> Joe Smith
I am not a lawyer, but you certainly can't afford to take legal advice
from a car dealer. You can't tell without reading the policy, but
almost all credit life insurance excludes pre-existing conditions and
suicide. So unless you manage to die of something else than your
pancreatic cancer, this will not work. Whatever assets you do have
will become the property of the finance company.
Here is what the California DoI has to say:
http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0020-lif=
e/credit-insurance.cfm
Stan Brown
@earthlink.net>:
(For the sake of argument, I'll assume this is an honest question
rather than someone trolling.)
First, my sympathies for your condition.
My advice can be summed up in one word: don't. Remember the old
adage: "If it sounds too good to be true, it probably is."
Details:
This sounds like fraud -- taking on a debt you know you cannot pay.
It's, well, "creative" to attempt to finance it by credit life
insurance on which you expect to collect relatively soon. It could
(and in my opinion, should) result in prison for the salesman who is
conspiring with you to defraud an insurance company.
You are not the first person to think of this. It's likely to the
point of near certainty that the documents are written in a way to
prevent your little scheme from succeeding. Here are some things to
look for:
A. Read the credit-life-insurance application in full. Some
potential gotchas are...
1. Is a minimum insured period before it will cover you? Many
policies provide that death by natural causes such as disease will
receive no benefit if death occurs within X period of time after the
policy was taken out.
2. Does it pay the whole balance due, including any late fees and
penalties. Will it pay the payments that you skipped while alive,
including late-payment penalties on those payments?
3. Make sure you answer every question absolutely truthfully. This
transaction smells very fishy, so you can be certain the company will
be looking for a way not to pay off. Any false statement on an
application, no matter how trivial, is usually grounds for revoking
the policy retroactively.
B. Read the loan application in full. The salesman is telling you to
skip ("defer") the initial payments -- make very, very sure that the
documents don't impose penalties for this.
C. Now as to the practicalities. You'll have to title, register, and
insure three vehicles, which is not exactly cheap. And you'll have to
maintain them, and have a place to park them. You cannot sell or give
them to anyone else, because they are collateral on the loans, and
the loans must be paid off if you transfer ownership. So you're going
to have a financial drain for the remainder of your lifetime.
So much for the legal and practical aspects. The last is the
intangible one: even if you can do this legally (highly unlikely),
you know that it's a scam or you wouldn't have asked about it. Is
that the sort of legacy you want to leave, gifts that are the fruit
of dishonesty? Your offspring's memories of you will last longer than
the cars: do you want to be remembered as a semi-crook or as an
honest man?
--
If you e-mail me from a fake address, your fingers will drop off.
I am not a lawyer; this is not legal advice. When you read anything
legal on the net, always verify it on your own, in light of your
particular circumstances. You may also need to consult a lawyer.
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com
David L. Martel
Sorry to hear of your illness. When you hear an offer that sounds to good
to be true you need to be careful. Here's what I notice. A salesman wants to
get commisions off the sale of three cars that you can not afford. He
advises you to screw an insurance company. He indicates that his auto
company will defer some "initial payments" but not forgive them. When you
die these payments and all others become due and payable (I guess). The plan
is that the insurance company will not ask for any assurance that you are
healthy, will sell you a policy that will pay the auto company and that you
will give these cars to your children.
I'm nervous about two things: you are trying to screw the insurer, and
you believe that your estate will not need to sell these cars to pay off
debts. If you can openly and honestly discuss your plan (including your
health) with the insurer before buying the insurance policy and get their
approval in writing then that takes care of my first fear. My second fear is
that we don't know what the future holds and your estate planning may go
awry. There's not a lot we can do about this.
I'd also require that the deferred payment plan be in writing. Be
absolutely sure that everything is deferred, don't get blind-sided by sales
tax or other charges.
I'm not a lawyer.
Good luck,
Dave M.
Mike Jacobs
Sorry to hear about your prognosis, sir. How does this salesman
propose to have you "defer payments" indefinitely?
So, you buy 3 cars, and also buy the optional Credit Life Insurance
(CLI), whose sole purpose is, it will pay off the remainig balance on
the car you bought if (when) you die without having paid it off.
BTW, such CLI costs FAR MORE per dollar of coverage than plain, old
ordinary life insurance does. You would be better off buying life
insurance coverage from an insurance broker, which would pay CASH to
your children when you die, which they could then use for whatever
they needed, not just to pay off a car loan. Assuming you could
afford the premium at your age and prognosis, that is. Query,
wouldn't the CLI cost more for someone who is medically close to death
too? Have you asked?
Maybe your finance company (you do know that you are allowed to pick
YOUR OWN finance company when you buy a car, right? You do not have
to go with the company the salesman suggests, or the one that is a
subsidiary of the car maker) will give you 1 or 2 months of free use
of the car before you have to begin making payments. What, sir,
happens if you SURVIVE more than 1 or 2 months more?
Well, then you have to start making THREE payments each month, on
THREE cars you just bought. And if you miss a payment, the finance
company will REPOSSESS them and you will LOSE the car, together with
the payments you have already made, and the CLI will be of NO HELP AT
ALL because you didn't DIE, you just couldn't afford the payments and
got repossessed. On top of which, YOU WILL OWE the finance company
the difference between the new price of the 3 cars, and the amount
they were able to get for them when they re-sold them as used cars at
auction - unless you also buy "gap insurance" to cover that immediate
depreciation that leaves you owing more than the car is worth. And
I'm not even sure gap insurance covers you, if you are getting your
cars repossessed rather than having them totalled in a wreck. In
fact, I'm pretty sure that a total-loss situation is ALL gap insurance
covers.
Meanwhile, the salesman is smiling all the way to the bank, because HE
gets his commission on 3 new car sales at once, plus his commision on
the optional CLI he sold you on all 3 of them, plus his commission on
the finance package he also brokered for you from his chosen finance
company, and maybe even plus his commission on the gap insurance he
sold you.
So, the salesman makes out like a bandit, and you risk going bust, not
only losing the cars, but OWING the bank money.
Don't do it. There Ain't No Such Thing As A Free Lunch. If it's
not actually a scam, it's a least a Very Bad Deal for you AND your
kids. Peace, and best wishes,
--
This posting is for discussion purposes, not professional advice.
Anything you post on this Newsgroup is public information.
I am not your lawyer, and you are not my client in any specific legal
matter.
For confidential professional advice, consult your own lawyer in a
private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
(tel) 410-740-5685 (fax) 410-740-4300
Paul Cassel
The idea behind creditor life insurance is if you die unexpectedly
before you've paid off the loan - the key word 'unexpectedly'. Here
there is at least a tinge of fraud because you are buying the life
insurance in the expectation of not living long enough to pay off the loan.
OK, so what can happen? Well, I suppose you need at the very least to
carefully read the policy before you start out down this path. The car
dealer should be able to furnish you a blank copy.
If there is no specifics about a person buying the policy with the
intent of not living for the duration, then you still face an issue. If
you buy all three cars at the same time, you'll get three policies which
will have claims at the same moment that you die. That may open up the
insurance company's alarm parameters causing an investigation. The
insurance company may claim fraud and then your kids will be stuck
fighting with the insurance company. They may win, but they may have to
fight.
I'd say first read that policy carefully. That may dissuade you from
proceeding. OTOH, I read that only something like 25% of parents leave
any estate to their children so if you don't, you are in good company.
The kids will survive.
grendal
I'm not sure about the product, but I would hazard a guess that you
couldn't qualify for any life insurance once you've been diagnosed
with cancer.
If you lie on your insurance application, you'll definitely cause the
insurance company to refuse to pay out *any* claim.
I'm sorry but I would be skeptical of anything a car salesman has to
say. I seriously doubt that your car salesman is licensed to sell
insurance (life) in your state. (Yet another reason to discount
anything he/she says.) If you want some quick and free advice, talk to
your car insurance agent. (Assuming you have an independent agent like
State Farm, etc ...)
HTH
Gordon Burditt
Credit Life Insurance pays off the balance of your loan if you die.
It does not cover your down payment (if any) nor your monthly
payments before you die. You're setting yourself up for a lot of
financial problems should you stay alive in very poor health rather
than die. Credit Life Insurance is generally a very bad deal
compared to other forms of life insurance (if you could get it).
It is illegal to lie on an application for insurance. If they ask
about your health and you tell the truth chances are they will not
approve the insurance. If you lie, they'll probably find out about
it and void the insurance when a claim is made. However, if they
don't ask, you're OK. If they ask about your health, you tell the
truth, and they still approve it, chances are the insurance costs
more than the car is worth.
It is also illegal to apply for a loan if you have no intention to
pay it back. I'm not sure whether this applies in your situation,
but you're treading awfully close. I suppose you could argue that
this is why you bought the insurance.
Seth
Paul Cassel <pcassel...@comremovecast.net> wrote:
>If there is no specifics about a person buying the policy with the
>intent of not living for the duration, then you still face an issue.
I'm sure OP _intends_ to survive, he just doesn't _expect_ to.
Seth
prab...@shamrocksgf.com
<OP is dying of cancer. Was asking about buying 3 cars and getting credit
life insurnance that would pay them off>
> Credit Life Insurance pays off the balance of your loan if you die.
> It does not cover your down payment (if any) nor your monthly
> payments before you die. You're setting yourself up for a lot of
> financial problems should you stay alive in very poor health rather
> than die. Credit Life Insurance is generally a very bad deal
> compared to other forms of life insurance (if you could get it).
I totally agree. It's WAY over priced for what you get.
> It is illegal to lie on an application for insurance. If they ask
> about your health and you tell the truth chances are they will not
> approve the insurance. If you lie, they'll probably find out about
> it and void the insurance when a claim is made. However, if they
> don't ask, you're OK.
Probably not. OK legally, maybe. But not OK financially, since most of those
policies have exclusions concerning pre-existing conditions. The only way he
could expect get away with this is if he expects to live at least another
year or so (but then he'd need to make the downpayment and monthly payments.
It didn't sound like, from his original post, that he wanted to make ANY
payments.)
If they ask about your health, you tell the
> truth, and they still approve it, chances are the insurance costs
> more than the car is worth.
> It is also illegal to apply for a loan if you have no intention to
> pay it back. I'm not sure whether this applies in your situation,
> but you're treading awfully close. I suppose you could argue that
> this is why you bought the insurance.
Not a lawyer but I think it'd still be considered fraud (at least against
the insurance company, even if they didn't ask about his health.)
--
Mike
-------------------------------
"Our enemies are innovative and resourceful, and so are we. They never stop
thinking about new ways to harm our country and our people, and neither do
we," George W. "Shrub" Bush Aug 5, 2004
Seth
<prab...@shamrocksgf.com> wrote:
>Not a lawyer but I think it'd still be considered fraud (at least against
>the insurance company, even if they didn't ask about his health.)
If you reveal all relevant information (or all that they ask for), it
isn't fraud.
There was a case a number of years ago where a college student got
annoyed with an insurance company that kept mailing him. He filled
out a life insurance application for his goldfish, including crossing
out where the application said "profession" and writing "species:
goldfish". The policy was issued.
When the fish died, the insurance company refused to pay. The student
sued, and won; the judge ruled that if they were willing to write a
life insurance policy on a goldfish and accept the premiums, they had
to pay off when the goldfish died.
Seth
JSmith
> >I am in an advanced stage of pancreatic cancer with a poor prognosis.
> >but was recently told I could get each of them a car using "Credit
> >problem to buy the cars(3) in my name, defer the initial payments and
> >the cars would become part of my small estate if I purchased optional
ny
> >lawyers out there? =A0I cannot afford to pay for one.
>
> It is illegal to lie on an application for insurance. =A0If they ask
> about your health and you tell the truth chances are they will not
> it and void the insurance when a claim is made. =A0However, if they
> don't ask, you're OK. =A0If they ask about your health, you tell the
> truth, and they still approve it, chances are the insurance costs
> more than the car is worth.
It can be worse than this. The insurance industry has a nice little
scam called "post-claim qualifying" (or something like that). It means
they accept your money and issue a policy without significant
checking, but if you make a claim they check if you really qualified.
If not, they refund your money and reject the claim.
The CBC did a story about a this regarding mortgage insurance about a
year ago, for example. A lot of people thought they had insurance, but
when they made a claim the company decided they were not qualified to
have the insurance, and rejected the claim. They refunded the
payments, but that didn't help the victims keep their houses. Often
they only refund the last payment, even though none of the payments
actually provided any coverage.
Note that this is not the same as being rejected for lying or making
mistakes on the application. In this case, they simply do not check
whether you qualify or not - they just collect the money, issue the
policy tentatively, and only confirm when you make a claim. You think
you have coverage when you don't. And of course if you don't make a
claim the insurance company pockets the cash, even though they never
really took on any risk.