by Moondoggy » Sun Feb 22, 2015 12:15 am
I have 2 universal life policies with 2 different companies. These policies were taken out in the early 80's and the expectation was that the interest rate would remain high and as I got older the cash value in the savings component of the policy would have built up enough to offset a portion of the cost of insurance and that I would either die and my heirs would receive the death benefit or the policy would age out at 100 and I'd be paid the remaining cash value.
Two weeks ago I received a frantic call from my new agent (I moved) and he said that my policy with his firm is in trouble. The policy is currently paying 4.5% on the cash value and they guarantee that they will always pay 4.0% minimum. The problem, as I understand it, is that my $100 quarterly premium is no longer covering the cost of insurance and the policy is eating up the cash value to pay the difference in cost. What the agent was telling me was that if the company increases their expenses on the policy to the max they are allowed to and also reduce the interest rate paid on the cash value to the 4% minimum, my policy will be out of cash value by age 74 and if that happens my policy will no longer pay the death benefit. His suggestions were to:
1. Increase my premium from $100 to no less than $250 per quarter.
2. Reduce the cost of insurance by reducing the death benefit and continue to pay my $100 quarterly premium.
3. Converting my current policy into a substantially reduced paid up whole life policy using my existing cash values to buy the policy.
4 Convert the existing policy to a different type of Universal life policy where the existing cash value would be invested in mutual funds managed by the insurance company. There would be no guaranteed minimum amount that this policy would earn but the hope is that the policy would earn an average of 8% return per year over any 10 year period of time.
Since my other policy was very similar to the one noted above, I checked it out and found that it too was now eating my cash values to pay the premium and this policy will also be dead by age 77.
At this point, I'm almost 64 years old and retired. My wife and I have pensions, IRA's, stock and in another 3 years I'll take Social Security. Before we retired we had everything analyzed and we will never need the cash value in either policy. The thought was that my $60,000 policy would go to my wife and a portion of that benefit would pay off any car loans and my final expense. The other policy would be paid to my daughter to pay the education expenses of my grandchildren. My concern now is that if I don't do something there won't be any death benefit and I'm also concerned that the agent may only be giving me the options that are in his best interest as opposed to my best interest. Does anyone have any suggestions on how to get out of this mess? Are there other alternatives to this problem that don't involve the agents, the companies or the existing policies? Please let me know.
Two weeks ago I received a frantic call from my new agent (I moved) and he said that my policy with his firm is in trouble. The policy is currently paying 4.5% on the cash value and they guarantee that they will always pay 4.0% minimum. The problem, as I understand it, is that my $100 quarterly premium is no longer covering the cost of insurance and the policy is eating up the cash value to pay the difference in cost. What the agent was telling me was that if the company increases their expenses on the policy to the max they are allowed to and also reduce the interest rate paid on the cash value to the 4% minimum, my policy will be out of cash value by age 74 and if that happens my policy will no longer pay the death benefit. His suggestions were to:
1. Increase my premium from $100 to no less than $250 per quarter.
2. Reduce the cost of insurance by reducing the death benefit and continue to pay my $100 quarterly premium.
3. Converting my current policy into a substantially reduced paid up whole life policy using my existing cash values to buy the policy.
4 Convert the existing policy to a different type of Universal life policy where the existing cash value would be invested in mutual funds managed by the insurance company. There would be no guaranteed minimum amount that this policy would earn but the hope is that the policy would earn an average of 8% return per year over any 10 year period of time.
Since my other policy was very similar to the one noted above, I checked it out and found that it too was now eating my cash values to pay the premium and this policy will also be dead by age 77.
At this point, I'm almost 64 years old and retired. My wife and I have pensions, IRA's, stock and in another 3 years I'll take Social Security. Before we retired we had everything analyzed and we will never need the cash value in either policy. The thought was that my $60,000 policy would go to my wife and a portion of that benefit would pay off any car loans and my final expense. The other policy would be paid to my daughter to pay the education expenses of my grandchildren. My concern now is that if I don't do something there won't be any death benefit and I'm also concerned that the agent may only be giving me the options that are in his best interest as opposed to my best interest. Does anyone have any suggestions on how to get out of this mess? Are there other alternatives to this problem that don't involve the agents, the companies or the existing policies? Please let me know.
Posted: Sun Mar 08, 2015 04:19 am Post Subject:
I don't have the benefit of being able to see your illustrations. But like the Thrivent policy, you should be able to use the reduced paid up option to obtain about $12,000-$14,000 of permanent insurance. Combined you would have close to or a bit more than $75,000 fully paid up, with $0 future premiums. You can turn around and use the $100 per quarter to fund a savings account and have another $400 per year for the future.
Your insurance worries will be over and you can enjoy the rest of your days praising God for your health, your church, and your family and friends.
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