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Can't request money back on whole life policy through Shenandoah Life Insurance Co.?

We sat down tonight with my mother about her estate and we are (and she is ) concerned about not being able to cash in her whole life insurance policies through Shenandoah Life Insurance Co. She has paid the full max. amount that was to be in their, but now she would like to cash her policies out and they said that they won't let her do that. Our question is, are they able to say that to her, that they can't cash out her whole life insurance policies and cancel the accounts through Shenandoah? She did receive a letter in the mail a few months ago saying that they were in "receivership"? and I did just look at their web site and found the following info. too... (A moratorium placed on the payment of claims and benefits, except for accident & health claims, death claims, and periodic annuity payments, at the time of receivership will remain in place during the parties’ negotiations. And, Shenandoah will not resume the issuance of new insurance policies until a plan of rehabilitation is approved by the SCC.) Can anyone please help us with understanding how we can help our mother be able to cash out her policies and close her accounts? Any help would be greatly appreciated! Thanks!!

Public Comments

1. If they are in receivership, you won't be able to collect until the process is complete. It probably won't be more than a few months.
2. You can call the Department of Insurance in your state for help. But I don't understand why you would want to cash in those policies. How old is your mother? Maybe you can have dividends pay the premiums or there might be other options to avoid cashing in the policies. Talk to your insurance agent or the Department of Insurance in your state.
3. Shenandoah Life insurance company is telling you they are broke and are having to be bailed out by the state you live in. That's what receivership basically means. The state your Mother took out her policy in is making the decision as to how much they will pay on all the policies. In the meantime, your Mother is stuck with no way to collect anything. The accounts are frozen and yes, it's legal. Receivership happens when life insurance companies are in poor financial standings and can't back their products. That's why it's so very important to NEVER shop for life insurance based on price alone. Unfortunately, now you know you should be buying life insurance based on the companies financial strength and history of returns and from someone or some company you know will be there when the time to collect comes around.
4. Correct. A company in receivership, means, that they are bankrupt, and have been taken over by the state. All assets are frozen. Claims (death claims) can only be paid out with the consent of the conservator - the state appointed person in charge of liquidating the company. You can cancel her policy, but there's no guarantee when, or IF, any of the cash value will be given to her. If there is a death claim, then the claim will be paid out - eventually - by the state guarantee fund, if nothing else. If a rehab plan is approved, then eventually she *might* be able to cash out her policies. Her best course of action, IF the policy is paid in full, is to sit and wait. Either business will resume operating, in a year or two, and she'll be able to 'cash out', or the company will stop operating, and her policy will be transferred to another insurer in your state, and THEN she can 'cash out'. This is a PRIME example of why life insurance should NOT be used as a savings/investment tool - because the money isn't YOURS, until you've actually cancelled the policy.