Life Insurance May Cover His Debts

Question: In a recent column you answered the question of a lady, married to a 65-year-old, who was concerned about being responsible for his $25,000 credit card debt (and with no assets) and his lack of concern about it.

Yes, this could be, as you say, a grasshopper-and-ant problem, but on top of the other suggestions you made, would it not be wise for her to take out a $25,000-plus life insurance policy on this deadbeat? It might be money worth spending and I'd appreciate your comments. Thank goodness I do not have this problem, but I feel concerned anyway.--M.W.

Answer: Your concern about the lady's plight was shared by others. And, admittedly, our advice to enlist a lawyer and explore the possibility of setting up a so-called "spend-thrift trust" (which would separate her funds from the community property shared with the husband and prevent creditors from getting their hands on her assets in the event he died with the $25,000 debt still in place) is a little cumbersome.

I've discussed with a couple of insurance underwriters your idea of taking out a $25,000 life insurance policy on this clown's head to protect the wife's assets, and they seem to feel that it might be a relatively inexpensive way to buy peace of mind.

There are a couple of factors to be faced here, though, and the first is that Mr. Free-and-Easy himself is going to have to go along with it--sign the insurance application and subject himself to the required physical examinations. Is he in pretty good health (physically, that is)? His fiscal maturation health is another matter.

Life insurance being the competitive product it is, our exploration into the annual rate being charged by leading life insurance companies for $25,000 worth of whole life (no frills) coverage for a 65-year-old man found a rather wide range--premiums running roughly from about$1,600 a year to $1,800 a year.

The same company that came up with the $1,600-a-year coverage, however, also suggested as an alternative a $25,000 "universal life" policy for a premium of about $906 a year. The primary difference between the whole life and the universal life policies is that the universal doesn't build up cash value as impressively as the whole life policy does.

Another suggestion made was that the lady explore the possibility of buying a "single premium whole life policy" on her irresponsible husband. There's a whopping, one-time, "single premium" involved that can be close to, or equal, to the total coverage, but it not only provides the death protection she needs, but also generates cumulative interest income which--after the imminent retirement she mentioned--can provide her with an income stream even if he is still alive.

This, admittedly, is a broad generalization of two rather complicated forms of life insurance which could be discussed separately in more detail almost indefinitely. So, don't accept this thumbnail sketch of them as the final, definitive word.

All I am saying is that, yes, the insurance people with whom I discussed this agree with you that buying enough insurance on this "grasshopper" to protect the assets of his "ant" wife in the event of his death might be a relatively cheap price to pay to get out from under the worry of his turning up his toes and leaving her stuck with $25,000 in unpaid bills.

Q: You wrote that getting refunds on Kodak Instant Cameras was "no snap." Well, those of us who live in the hinterlands (Las Vegas) and were not lucky enough to have seen the May advertisement you mentioned aren't simply finding it "no snap," but just plain "tough luck." I called the Kodak 800 number listed in your column to request a refund form and was told that unless you had sent in the form by Aug. 1, along with the proof of purchase, it was just too bad.

Well, Kodak may not have realized it, but that attitude has left many of us out here with rather expensive Colorburst 350 paperweights. I am a regular user of Kodak photographic products, batteries and video recording tape. However, after this treatment, I will avoid using any Kodak products if alternatives are available.--R.F.

A: Understandably. And this backwash of ill will is just one of a number of massive headaches that Kodak encountered when it lost a patent infringement suit brought by Polaroid and, three years ago, had to yank millions of instant cameras off the market. The woes were further compounded when it also lost a class action suit and the court ruled that Kodak had to offer $250 million in refunds to some 4 1/2 million camera buyers.

Now it has to cope with thousands of buyers, like you, who didn't get the word about how to apply for the refund before the deadline expired.

"We're still getting calls from people who want to know where they can buy film for their Kodak Instant Camera," the customer service representative for Kodak in Rochester, New York, Carroll Howell, says with distress. "We started advertising the refund procedure as soon as the court ordered it, back in January, '86, but, of course, you don't get the word out to everyone ."

In Kodak's defense we have to point out that it was the court , not Kodak, that put the cutoff date as Aug. 1 of this year. The court later extended the cutoff to Sept. 9, but that, alas, was the end, sure enough. It just wasn't of Kodak's doing, but it's not going to make you feel one whit kindlier toward the company, I know.

Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.

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