My mom has been paying on a whole life policy for over 50 years. The benefit amount is now only $6000. I think she could have had more than $60,000 had she put this money in a bank instead. Is paying on a policy this long with such a small benefit legal?
2007-07-14 06:57:00 · 11 answers · asked by Sakja 2 in Business & Finance ➔ Insurance
The BENEFIT amount doesn't change on whole life. It's been that amount, her WHOLE LIFE.
Yes, she COULD have done as well or better sticking it in a mayo jar under the bed.
Yes, it's legal.
Whole life is the least amount of coverage for the most money.
2007-07-14 11:06:28 · answer #1 · answered by Anonymous 7 · 1⤊ 0⤋
Barry, that's not true. There are plenty of cases where more money is paid into a whole life policy than what is paid out in the end. And as for the question, insurance is a gamble - yes, she may have very well paid more into it than $6,000 - but if she would have died 5 years after taking out the policy, her beneficiary still would have receive $6,000 - which probably would have been much more than she had paid into it at the time. That's the way insurance works. Insurance companies have to make money somehow.
2007-07-15 09:08:01 · answer #2 · answered by jonesy634 2 · 1⤊ 0⤋
It is not paid up until the age of 100. People are living longer and pricing can actual go down from 1 year to the next. Life insurance should always be shopped every 2-3 years.
Yes your mother could have made more money. The s&p 500 has averaged over 10% for the last 80 years. Figure it out at what she has paid a month.
Whole life is out dated for what you get. You can get a life time income buying IEUL Insurance. You can borrow on the money when you need it. At retirement time you can draw on it tax free. The money out lives you and you still have a death payout..
2007-07-14 11:23:03 · answer #3 · answered by Sharon A 1 · 0⤊ 0⤋
It really depends on what her premium was, if she was paying $40 a year then it is very possible. If she was having dividends sent to her each year it is very possible and I truly suspect that this is the case based on your information. If she borrowed on the policy. $6000 would have been a decent sized policy 50 years ago. Call the company and see if you can get all of the particulars, she may have been mailed thousands of dollars in dividends over the years or taken a loan or reduced the face amount.
2007-07-14 20:09:23 · answer #4 · answered by Heather M 2 · 1⤊ 0⤋
That's the way whole life insurance work,its more expensive than term because they promise you a savings inside of your policy ,but little do they tell you that you have to borrow the money you have saved up,and when you borrow something you have to pay it back with interest and God forbid something happens to your mom, the insurance company keeps the savings, and all of this is written right inside of the policy but people just don't read their policies.www.primerica.com/pheebranch Visit my website and find out more. Take that policy and cash it in,and put that 6000 into a mutual fund ,Find the nearest PRIMERICA office near you and get youself and your mom some term insurance.
2007-07-14 10:07:09 · answer #5 · answered by phee-nomenal 1 · 1⤊ 0⤋
You must read the original insurance contract she signed when she purchased the policy. The details will be included there, in the fine print.
My guess is they are correct at the $6000 figure, and that Mom tossed away a LOT of money for nothing over the years.
2007-07-14 08:54:26 · answer #6 · answered by acermill 7 · 0⤊ 0⤋
How much was the original face amount? How much was your mother paying each year in premiums? Did she ever take a loan or skip some payments?
Call the issuing company and get a current illustration.
The policy may have done exactly what it was suppose to do.
Insurance requires regular reviews for adequacy and cost effectiveness. It sounds like your mother has not met with a financial advisor in 50 years.
Go meet with one now both for her and for you.
Good Luck.
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2007-07-14 09:32:28 · answer #7 · answered by insuranceguytx 5 · 1⤊ 0⤋
I am an insurance adviser for the last 25 years and in fact I mostly sell is whole life with paid insurance . You are absolutely unclear in your question and there isn't a doubt in my mind .You didn't say how much the premium was and on top you didn't mentioned if she received the dividends in cash , or where they paying part of the premium or all of it . Or have you mentioned that the dividends were buying paid up insurance or not . What was the $6000.00 the death benefit or the cash value ??? As well you aren't saying whether this is a par or non par policy and how old were you when it was taken out or were you medically rated .Before you post a statement like or question like yours please get your facts
2007-07-14 08:04:17 · answer #8 · answered by Gentleman 7 · 1⤊ 3⤋
it is legal, but at the same time whole life insurance is a rip-off. the reason it is legal is that it is a contract between your mom and the insurance company. she agreed to the terms of the contract which keeps the company out of trouble. my company was founded by a man who's parent's were ripped-off by an insurance agent who sold them a whole life policy. it is my company's crusade to help educate the public about the bad contracts that insurance companies offer the public. if you would like more information about my company just visit the link below.
2007-07-14 07:08:20 · answer #9 · answered by Anonymous · 1⤊ 0⤋
impossible. There's no way you can pay more into a whole life policy than what the death benefit would be.
You THINK she could have put more than 60,000 into it? I smell some exaggeration here..
2007-07-14 18:03:44 · answer #10 · answered by Barry auh2o 7 · 0⤊ 2⤋