Watch Out for that Zero Premium Life Insurance

Ever heard of zero premium life insurance? It’s quite likely that you haven’t. It’s a form of insurance policy that hasn’t quite managed to leave the starting gates. It’s still sitting at mark zero, waiting to be approved not only in the United States but in other countries.

Why? Well, before you find out why it’s best to describe what zero premium life insurance actually is, since you probably haven’t a clue (though it probably has something to do with “zero” and “premium”, in other words no premium to pay).

Zero premium life insurance is a form of insurance meant to be geared towards seniors, generally between the ages of 65 and 85. As a form of permanent life policy it essentially has an outside agency pay for a $50,000 face value insurance policy. The third party will agree to pay for any premium that comes the insured’s way, and in exchange the company will receive $35,000 of that total $50,000. That doesn’t mean that the insured person’s family gets zero: they’ll receive $15,000 of the life policy and not have to worry about a single premium payment. Sound good?

Well, if you think so, then not everybody agrees with you. The big problem is that every beneficiary of a life policy must have what is known as insurable interest. Any dependents, wives, children and so forth are insurable. But some strange company does not. Therefore they are not hit with any interest whatsoever, and that has many agents reeling away from this premium paid policy.

More, though, it seems ethically wrong. It’s essentially investing in a person’s death. These companies paying the premiums want the person they’re investing in to die so they can stop paying premiums and collect their $35,000. A price shouldn’t be put on somebody’s life regardless of the circumstances. Because of this and the aforementioned interest problems, this brand of policy has not gotten anywhere – it’s not even legal – and it’s not likely to make any moves any time soon. So if you run into offers for it online, be sure to avoid them for yourself.