by Guest » Mon Feb 06, 2012 11:25 am
I posted in auto insurance by mistake, so I will post here.
"The policy would just have gathered enough cash value to pay off the premium thereby reducing itself"
But, how is the increasing cash value ever GUARANTEED to cover premiums after only 10 years? Doesn't it depend on the dividend rate which depends on the profits the insurance company makes? I didn't intend that the premiums were large, I meant the death benefits are large.
i saw this question posted on Yahoo! Answers. Iti s the #1 result in google to the search for "paid up life insurance". If this is not correct, someone should put a better answer to that question.
Q:What does paid up life insurance mean?
A: The term "paid up" in life insurance really mean that you have built enough cash value where you don't have to pay your premiums for awhile. The catch is, your life insurance is still enforced and someone has to pay the annual premiums. So the insurance company takes money from your cash value to pay for it. If you die someday, your family will get the death benefit MINUS whatever cash value was taken (including the interest charged on the cash value). When your cash value is near depletion, you will get a letter that your life insurance policy is in endangered of being lapse. If you do not pay the premiums, you will lose coverage.
Source(s):
Life insurance expert and analysis.
"The policy would just have gathered enough cash value to pay off the premium thereby reducing itself"
But, how is the increasing cash value ever GUARANTEED to cover premiums after only 10 years? Doesn't it depend on the dividend rate which depends on the profits the insurance company makes? I didn't intend that the premiums were large, I meant the death benefits are large.
i saw this question posted on Yahoo! Answers. Iti s the #1 result in google to the search for "paid up life insurance". If this is not correct, someone should put a better answer to that question.
Q:What does paid up life insurance mean?
A: The term "paid up" in life insurance really mean that you have built enough cash value where you don't have to pay your premiums for awhile. The catch is, your life insurance is still enforced and someone has to pay the annual premiums. So the insurance company takes money from your cash value to pay for it. If you die someday, your family will get the death benefit MINUS whatever cash value was taken (including the interest charged on the cash value). When your cash value is near depletion, you will get a letter that your life insurance policy is in endangered of being lapse. If you do not pay the premiums, you will lose coverage.
Source(s):
Life insurance expert and analysis.
Posted: Mon Feb 06, 2012 01:50 pm Post Subject:
Look where you had posted the question by mistake. Maybe you'll find the answer there ;)
Posted: Mon Feb 06, 2012 08:02 pm Post Subject:
Actually, no response to that reply...
Posted: Fri Feb 10, 2012 09:40 pm Post Subject:
"The policy would just have gathered enough cash value to pay off the premium thereby reducing itself"
and
A: The term "paid up" in life insurance really mean that you have built enough cash value where you don't have to pay your premiums for awhile.
Don't be fooled by any of this nonsense! Both statements are describing what is known as "vanishing premium" concepts, which are unlawful in all states.
A fully "paid up" life insurance policy (such as a 10-pay, 20-pay, or payable-to-age 65) is one which will never lapse and will not require future premium payments beyond that point.
Everything else you have described or seen answers about is pointing you in the direction of a policy that will not meet your expectations and cause you to lose all the money you paid for it -- unless you are willing to begin throwing huge amounts of cash at it later in life, probably at a time you can least afford to do so . . . like the husband of one of my students, who after paying almost $200 per month for more than 15 years was told he now needed to pay almost $900 per month (at age 75) to keep a $100,000 universal life policy alive for the next ten years -- a total of $107,970. And that was on top of the $35,000+ he had already paid.
Great policy, wasn't it?
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