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Life Insurance question

Stiganator

Platinum Member
Oct 14, 2001
2,489
0
76
If you have a 20k whole life insurance policy, why would the cash value be under 1k? It doesn't make sense to me.
 

boomerang

Lifer
Jun 19, 2000
18,897
638
126
They're going to pay 20K upon your death.

You build cash value over time. How long have you had the policy?
 

dullard

Elite Member
May 21, 2001
22,345
701
126
Many (most?) whole life insurance plans are money losers unless you have consistantly paid in for 8-10 years. That difference is the profit they've taken from you. Of course, they collect the profit up front.
 

boomerang

Lifer
Jun 19, 2000
18,897
638
126
Originally posted by: dullard
Many (most?) whole life insurance plans are money losers unless you have consistantly paid in for 8-10 years. That difference is the profit they've taken from you. Of course, they collect the profit up front.
Exactly right!
One of the mistakes I made in my youth was getting a whole life policy. The salesman was slick and it seemed like a "grownup" thing to do. It made no real sense in retrospect. I was single at the time, could ill afford it, etc.

I payed for about 2 1/2 years and then wisened up. I thought the sales guy was going to bust out in tears.
 

Stiganator

Platinum Member
Oct 14, 2001
2,489
0
76
My parents paid for it for a long time, I was thinking of cashing it out to pay some of my student loans, good idea or bad idea?
 

boomerang

Lifer
Jun 19, 2000
18,897
638
126
Originally posted by: Stiganator
My parents paid for it for a long time, I was thinking of cashing it out to pay some of my student loans, good idea or bad idea?
Well, there's not much cash to be had. Are they still paying? If no one is paying the premiums, I think the payout will stay stagnant but I don't know that for certain.

Those two questions would be the determining factor for me.
 

sixone

Lifer
May 3, 2004
25,168
3
61
Originally posted by: joshsquall
I will never understand why single people with no dependents pay for life insurance.
I do. If something happens to me, my father will be responsible for dealing with my belongings and my funeral expenses. I have enough insurance that he can do so comfortably, and have some left.
 

sixone

Lifer
May 3, 2004
25,168
3
61
Originally posted by: Stiganator
Assuming the premiums have been paid for 20 years what can I expect?
If it has a 1k cash value after 20 years, don't expect much. Take that money and get yourself a term life policy.
 

jrphoenix

Golden Member
Feb 29, 2004
1,295
2
81
Originally posted by: Stiganator
My parents paid for it for a long time, I was thinking of cashing it out to pay some of my student loans, good idea or bad idea?
You need to do some more research. Most people on the forms fancy themselves financial planners and give advice without all the info. Questions to be asked:

1. Is the policy a participating (receiving dividends) policy?
2. If it does have dividends, is the policy paid up? Many whole life policies are fully paid up after 20 years. Read no more payments, keep the life, cash value grows.
3. How much have your parents paid into the policy. If they have paid less than the cash value (at $1,000 doubtful).... you will be taxed on the gain if the policy expires. You will not be taxed for taking a policy loan.

PM if you have questions?

What company is the policy with?
 

alrocky

Golden Member
Jan 22, 2001
1,771
0
0
Originally posted by: joshsquall
I will never understand why single people with no dependents pay for life insurance.
My parents paid for it for a long time
Looks like his parents were placing a small bet against... er on him.

 

jadinolf

Lifer
Oct 12, 1999
20,952
3
81
Originally posted by: joshsquall
I will never understand why single people with no dependents pay for life insurance.
Maybe they won't always be single and the premium will be lower if they got it when they were younger.

 

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