Could my mother take a loan out from my life insurance and leave me liable for it?
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Could my mother take a loan out from my life insurance and leave me liable for it?
When I was an infant (I’m an adult now) my mother took a life insurance policy out in my name. A year ago she was dealing with cancer and took a loan out on it. She passed away 2 months later and I never knew about the loan. I got my bill in the mail and am now expected to pay this loan back. What can I do? Am I stuck paying this loan that I never agreed to simply because I had this plan in my name?
Asked on November 11, 2011 under Insurance Law, Minnesota
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
I am so sorry for your loss and for the situation as it stands. The type of policy that allows you to take loans is generally a whole life policy. You Mother must have been the owner of the policy in order for the insurance company to permit her to take out the loan. If that is the case then the estate is now the owner of the policy and it may be that they have to pay back to loan to the company. But there are ways to get around that too, if the policy earns dividends then it may be able to pay itself. So you need to have the policy reviewed by someone who can help - possibly a broker? Good luck to you.
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