“Term Life,” a 2016 action drama, stars Vince Vaughn as con man Nick Barrow and Hailee Steinfeld as his estranged 16-year-old daughter, Cate. When a robbery he planned goes sideways, Nick finds himself pursued by a drug cartel leader and a crooked detective (played by Jordi Mollà and Bill Paxton, respectively). So he goes looking for the best protection he can get: a life insurance policy.
The fast-paced 90-minute movie is a heartwarming story about a father and daughter reuniting under the threat of gunfire. More importantly (to us), it’s about getting life insurance. Here’s where Nick went right — and wrong — in getting a policy to support Cate.
Right: Using life insurance to protect your family
“Look, I’m the one that provides for Cate,” Nick says, once he realizes he's in danger. “If anything was to happen to me, worst-case scenario, I’ve got to make sure that she’s taken care of.”
The line is a word-perfect explanation of why you need to have life insurance if someone depends on your income: Your insurer pays a death benefit when you die and your beneficiary can use that money to support themselves. For Cate, it could cover necessities like rent and long-term goals like college tuition.
Wrong: Naming a minor as a beneficiary — twice
We later see that Viktor Vasquez, the deadly cartel leader, has gotten ahold of Nick’s insurance application (let’s hope a digital copy exists). A look at the paperwork reveals that Nick has listed Cate as the policy’s primary and contingent beneficiary — two mistakes in one.
Because she’s a minor, the insurance company won’t pay out to Cate. If Nick dies before she turns 18, the money will get tied up in court for months or even years. And if Cate dies, then Nick’s money goes nowhere. Life insurance only pays out to the people listed on the policy. A contingent beneficiary should be a different person who can accept the payout if the primary beneficiary isn’t able to.
With Cate’s mom in treatment for alcohol addiction, it may not be the right time to name her as a beneficiary. Nick’s best option is to direct the insurance payout to a trust and name another adult he can count on — like his best friend, Harper (played by Jonathan Banks) — as trustee of the funds.
Right: Expecting to pay more as a smoker
The life insurance agent who sells Nick his policy (played by Taraji P. Henson) asks him a handful of — surprisingly true-to-life — questions:
Do you have any felony convictions from less than three years ago?
Do you skydive?
Are you a pilot?
Do you drink or smoke?
A yes to any of these will raise your life insurance rates, and in the case of a recent felony, the insurance company will deny your application altogether. Nick only says yes to smoking and drinking, and hands over a check he has ready to cover any “overages” that would incur.
He’s right in assuming he’ll need to pay more. But, he still needs to go through a medical exam to get accurate rates. In reality, the check he hands over is probably for too much or too little money, and underpaying would keep his policy from being approved.
Wrong: Pre-paying taxes on a life insurance payout
When paying all of his premiums upfront (another thing you can’t do with a term life insurance policy), Nick tries to pre-pay any taxes on the death benefit. In real life, life insurance money is tax-free as long as it’s paid out all at once.
“Aside from the fact that the application was stolen, Nick would have needed to sign the policy once approved,” says Elia Weg, certified financial planner and Policygenius Sales Associate. “Handing his agent a check for all the premiums ahead of time is pointless.”
But the biggest detail the film's researchers missed? “If Nick had a substantial amount of money to pay the premiums and do so in advance,” says Weg, “a permanent life insurance policy would have made the most sense, likely changing the name of the movie.”
Spoiler alert: Nick and Cate ultimately make it through multiple tense stand-offs unscathed, but the moral of “Term Life” is clear: If you support someone financially, you should get a life insurance policy ASAP — especially if your job involves working with people who might threaten to kill you.
Image: Nastia Kobzarenko