Dear Insurance Adviser,
My new husband and his now-deceased former wife bought a motor home in 2004. They got credit-life insurance on all of their loans because of their age and huge loan for the motor home. When his wife discovered several years later that she had terminal bone cancer, they went to find the paperwork for the loans to prepare for the inevitable.

When they couldn’t find the motor home documents, they tried to get them from the lien holder/bank they were paying. Their original bank had been taken over, and the new bank told them there was no credit life and that no papers were transferred. It was supposedly all done electronically.

How can they drop the credit-life insurance and/or refuse to honor it? More than $90,000 is still owed on the thing, and the payments are more than $810 per month. My husband is 58 years old and wanted to retire in five years but can’t afford to now. Does this happen a lot, and can you help?
— Defrauded in Des Moines

Dear Defrauded,
There are usually three parties to a credit-life transaction, in addition to the borrower. There is the dealer who sells the motor home, the banker who finances the loan for the dealer, and the life insurance company that insures the borrower’s life.

Credit-life insurance is sold either through car dealers or through banks. The credit-life insurance premium for the entire duration of the loan is usually added in with the loan amount and is reflected in the loan paperwork.

At the time of the loan, the borrower is given a short policy document showing the policy number and the insurance company name and address. When a borrower dies, the borrower’s heirs send a copy of the death certificate to the insurance company. The insurance company then proceeds to pay off the loan.

But what happens if the life insurance policy or other related paperwork can’t be found when the borrower dies, as your husband has experienced? How can you collect when you don’t know the name of the insurer or when you don’t have proof that you have ever had a policy? Especially when, as in your case, the bank has changed hands and the new bank can’t find the paperwork either? That’s a real dilemma with no easy solution. What you need is an insurance company name and policy number.

Here are a couple of suggestions.

Try the motor home dealer. It may have paper or electronic files with a copy of the financing documentation, including the credit-life information, especially if the dealer arranged the loan and “sold” the credit-life insurance. If the dealer doesn’t have that information, ask who provided its credit-life coverage. If you can get the insurance company name, the insurer may be able to locate your husband’s policy information alphabetically, or with his Social Security number.

If your husband did not finance the vehicle through the dealer, but instead went to the bank directly, the bank should be able to retrieve at least electronic copies of the information. I recommend that you visit the bank personally and make an appointment to see one of the loan people who worked at the previous bank and continued on with the new bank. They should be able to remember the name of the insurance company that handled the prior bank’s credit-life insurance business.

Good luck.

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