by Liriel47 » Thu Jun 21, 2012 08:23 am
Hello. I have a general question that I am asking on behalf of my mother. She has a Modified Permanent policy with a 20 year term + cash value.
What I would like to know is what does the 20yr term have to do with the policy if it is permanent? Does the premium go up after 20 yrs?
Also, if the policy has a face value, is that the amount already paid into the policy and if so, can you take out a loan for up to 90% of the face value or does it have to be on the value of how much you have already invested in the policy?
Also, do you continue to pay into the policy for life or only up to a certain amount of money that the policy is worth?
Thanks a lot!
What I would like to know is what does the 20yr term have to do with the policy if it is permanent? Does the premium go up after 20 yrs?
Also, if the policy has a face value, is that the amount already paid into the policy and if so, can you take out a loan for up to 90% of the face value or does it have to be on the value of how much you have already invested in the policy?
Also, do you continue to pay into the policy for life or only up to a certain amount of money that the policy is worth?
Thanks a lot!
Posted: Sat Jun 23, 2012 10:59 am Post Subject:
Modified Permanent policy with a 20 year term + cash value
This was a type of policy first marketed in the late 1970s/early 1980s. At the end of 10 or 20 years (depending on the length of the term), the "cash value" was intended to be used to buy down the premium for the next 10 or 20 years, which would naturally be higher due to age, and the continuing premium was supposed to be about the same as it had been -- but no guarantees of that. The policy contains a guaranteed maximum cost of insurance, which is significantly higher.
Or the policy could be cancelled at the end of the term and the cash value distributed.
The face value is NOT the surrender or loan value, it is the life insurance amount payable on the death of the insured. The surrender/loan amount is the cash value less any surrender charges.
Failing to pay premiums will cause the cash value to be used to pay unpaid premiums. When the last $1 is taken from the cash value, the policy will lapse for nonpayment of premium and there will be no insurance.
Also, do you continue to pay into the policy for life or only up to a certain amount of money that the policy is worth?
Have to see a copy of the policy to give you an answer to this question.
Add your comment