Free Life Insurance, and No, There's No Catch

You've probably heard that nothing in life is free. But sometimes you can get something for nothing.

For example, MassMutual Financial Group, one of the nation's largest life insurance companies, is actually offering something free to low-income working parents.

Under its LifeBridge program, MassMutual is writing term life policies at no cost for families earning $40,000 or less. The company has promised to pay the premiums for 20,000 policies nationally, each with a $50,000 death benefit.

Each LifeBridge policy -- one per household -- has a 10-year term and must list the insured's children as the beneficiaries. If the insured parent or legal guardian dies during the 10-year period, the $50,000 benefit per policy will be applied toward the education of the children named as beneficiaries. The money is put into a trust administered by the MassMutual Trust Co. on behalf of the children. The trust will pay the educational expenses directly to the educational institution the children attend.

Various types of schools qualify for reimbursement, including, but not limited to, preschools, private schools, vocational schools, community colleges, universities, art and music schools and graduate schools. Some of the expenses covered include books, tuition and room and board.

Mark Di Giorgio, director of public relations for MassMutual, said the LifeBridge program is part of MassMutual's effort to merge its corporate philanthropic efforts in education with its main corporate agenda, insurance. The LifeBridge program was introduced in September 2002 and has been rolled out nationwide on a state-by-state basis. It is available in 46 states plus the District. The policies are not yet available in New Mexico, West Virginia, Maine or South Dakota. The company is working on approval in those states, Di Giorgio said. So far MassMutual has written 3,650 policies. The company hopes to issue 20,000 policies by Dec. 31, 2007.

I wondered why the policies haven't been snapped up by the many low-income families who don't have life insurance. Part of the answer is that, with no advertising budget, the company has been relying on community and nonprofit groups to get the word out about the program, Di Giorgio said.

But there's more.

"This is a population of people who are accustomed to bait-and-switch schemes," Di Giorgio said. "They are accustomed to people offering one thing and giving them another. Many free offers are burdened with small type."

You should be skeptical about free offers. But in this case, there's nothing to lose. Even though the policies are for just 10 years and $50,000, it's better than no insurance at all.

"There is no small type in this offer," Di Giorgio said. "This is an absolutely 100 percent free offer."

To be eligible for the free term life insurance, applicants must be: