I know some folks that

Posted: Mon Feb 06, 2012 10:05 am Post Subject:

Sorry, i have no idea why this got posted in auto insurance. if someone can move it over to life, that would be great.

Posted: Mon Feb 06, 2012 11:02 am Post Subject:

Correct and incorrect. It wouldn't be 'paid up' after 10 years of paying the premium. The policy would just have gathered enough cash value to pay off the premium thereby reducing itself. It however does not reduce the death benefit. Once the accumulated cash value has reduced itself to such an extent that it cannot pay off the premium, the policy lapses. And yes, these are large policies in the sense that people tend to pay a big premium amount up front. It is simply to take advantage of the concept of Universal Life policies.

Posted: Mon Feb 06, 2012 11:17 am Post Subject:

"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: Tue Feb 07, 2012 10:01 am Post Subject:

Does the policy itself say that CoI coverage is guaranteed after 10 years of paying premiums or is the agent trying to sell it by making such a claim? Have you had a look at the policy document?

Posted: Tue Feb 07, 2012 10:19 am Post Subject:

Heller,

I did look, but I didn't look at it deeply. This was purchased 2 years ago.

I did see a "target premium" of 15,000, adn if there's a target premium, this suggests it would be variable, in which case how is paying 25k premiums for 10 years going to fund the remainder of his life?

He "trusts" his guy and I said, well wouldn't' you rather know now then find out 20 years later and he said he would never have any reason to doubt it.

This is NYL, I can't imagine they would ever draft a policy that would be such an obvious loss leader on a permanent policy. If I could get one of those policies, pay premiums for the first 10 years at 2.5% of my death benefit and then have it funded for life? i don't even need life insurance, but sIgn me up just in case while i can afford it! It sounds too good to be true.

I am very concerned because my father is using the "my life insurance will be fully paid in 8 years and then I never have to worry about it again" as a reason to work for eight more years instead of selling his company.

He said that "that's why it's good to have a good agent that knows how to find these kind of policies - I said anyone can call NYL and will be assigned an agent and offered the same thing"


I told him to find me it in the policy and he said "I trust him". This is a top selling agent at a major firm. His livelyhood depends on getting people like my father to trust him.

There's tension because I don't "trust" his agent, but I have serious concerns that 1.) He is overpaying for insurance he doesn't need and 2.) It wasn't ethically explained.