Life Insurance question

[Stiganator]

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]

They're going to pay 20K upon your death.

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

 

[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.

 

[Pacfanweb]

Cash value is different than the Death Benefit.

 

[boomerang]

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]

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]

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.

 

[Stiganator]

Assuming the premiums have been paid for 20 years what can I expect?

 

[Gunslinger08]

I will never understand why single people with no dependents pay for life insurance.

 

[sixone]

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]

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]

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?

 

[Stiganator]

Well that's pure speculation from reading some posts on the tubes.

 

[alrocky]

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.

 

[DaveSimmons]

No wonder Mom always wanted him to have seconds of the macaroni and cheese.

 

[imported_Lothar]

If you're young, single, and don't have any dependents, there's no need to get life insurance.

 

[NanoStuff]

Static 20k coverage? You better jump off a bridge now before inflation eats your benefits.

 

[jadinolf]

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.