Need life insurance help!

[luvwinnie]

We purchased life ins. for DH 3 yrs ago...ALlstate Universal Life...was told we could take lump sum if needed, it would gain interest, etc....well, we have put in over $3000 and I just called to find out the value is $1300!!! I have to call agent, but in the meantime, any thoughts??

 

[Tiggeroo]

Sorry, but the payout value is always less then what you've paid in. You will also have to pay back what you take out. The amount you can draw depends on how long you've had the policy, etc. You should have some sort of schedule with your policy.

 

[peg2001]

My opinion only: whole life and universal life are a rip off. Stick with term insurance. It works just like car insurance. You pay the premiums for insurance only, no so-called saving or investment. If your DH dies, you collect.

When we bought life insurance, the push for whole life or universal life was very strong. I told the agent that if she could explain it to me in terms I could understand, I would buy it. It turned out that she could not explain to me HOW the insurance company determined how much the savings element was at any particular time. It was a "black box" calculation.

Sorry, I'll stick to things I can understand. TERM life insurance and a separate savings/investment vehicle.

Good luck!!

Peggy

 

[Briar Rose 7457]

without knowingf the particulars of your plan --


when you buy whole life insurance, you're buying two things: insurance (let's say $100,000) in the event of your death, and an investment that will yield a cash value should you care to cash in the policy prior to death. the cash value is added to the payout -- so that a $100,000 policy may actually pay $104,000 if the cash value of the policy is $4,000.

a portion of the premium goes to pay for the insurance, and a portion is invested. the portion that is invested is the cash value. so if you've paid $3000 to the insurer, and the cash value of the policy is $1300, the balance was used to cover the cost of your insurance.

if you'd bought term insurance, your premiums would be lower, but you would not accumulate a cahs value.

if you wanted to preserve your $3000 you should have put the money in the bank.

 

[luvwinnie]

Obviously, our insurance person did not make this all clear and we were just gullible! I assume I can change to term?

 

[Annie&Hallie'sMom]

Briar Rose, a great explanation! (I just went through the whole term/whole life insurance experience).

Luvwinnie, you should be able to cancel and/or change.

Just an FYI, did you know that the majority of term life insurance is never paid out? (because the insured didn't die during the time frame specified in the contract).

 

[peg2001]

Originally posted by Annie&Hallie'sMom
Just an FYI, did you know that the majority of term life insurance is never paid out? (because the insured didn't die during the time frame specified in the contract).

Since it is my life and my DH's life that is insured, we consider this a GOOD thing!! We are essentially betting that we will die during our term contract but hoping we lose our bet!

Peggy

 

[KiminChicago]

The way our insurance agent explained it, you might want to consider a mix of term and whole life. The majority should be term insurance as it is much cheaper, however, at some point the term runs out and then you can be left with no insurance, or have to pay very high premiums for new term insurance. We got the term insurance for 20 years, so that if something happens while our kids are growing up, the surviving spouse will be able to stay in the same house and basically enjoy the same standard of living we currently enjoy. Once the kids are grown, we won't need the same level of insurance.

The whole life policy (as our insurance agent explained it) can be used to help take care of estate taxes, funeral costs, etc. And, because we bought it while we were still relatively young, it didn't cost as much as it would if we bought it after the term insurance ends.

The key is to find an insurance agent who listens to your needs and whom you trust.