Cashing Out Whole Life?

[ickywasp]

My grandmother recently died and I learned she had purchased ME a whole life insurance policy when I was born. For the past 34 years, she had been paying the premiums ($15 a month) out of her personal bank account.
Guaranteed Insurance Option: $10,000. Accidental Death Rider: $10,000

I recently contacted the insurance company and was surprised by how little cash value the policy had amassed: $625.

Is this normal? I've read some less than positive reviews of whole life insurance, but this seems especially bad. She paid in over $6,120 in premiums since she bought it...

Thanks
Scott

PS The current company is Jackson National Life Insurance, but they are just the latest in a long line of companies that have apparently have held this policy.

 

[scagnt83]

My grandmother recently died and I learned she had purchased ME a whole life insurance policy when I was born. For the past 34 years, she had been paying the premiums ($15 a month) out of her personal bank account.
Guaranteed Insurance Option: $10,000. Accidental Death Rider: $10,000

I recently contacted the insurance company and was surprised by how little cash value the policy had amassed: $625.

Is this normal? I've read some less than positive reviews of whole life insurance, but this seems especially bad. She paid in over $6,120 in premiums since she bought it...

Thanks
Scott

PS The current company is Jackson National Life Insurance, but they are just the latest in a long line of companies that have apparently have held this policy.

It all depends on what type of WL policy it is, and how it was set up.

There are 2 main types of WL Policies
1. Participating WL
Meaning that it participates in company dividends and receives a dividend credit each year.

2. Non-Participating WL
Meaning that it does not participate in receiving company dividends.


If the policy is Non Participating, then it will build little to no Cash Value.
Many cheaper policies are Non-Participating.

If the Policy is Participating, then it will build some Cash Value, but the growth rate is largely dependent on the design of the policy and the company that issued the policy.
Basically, some policies are designed to have good Cash growth, others are not.


At $15/m you cant expect to have a lot of money in the policy.
It was most likely a protection based policy, not a policy meant to generate a return on premiums paid. In otherwords, it was meant to build up a Death Benefit, not a large CV.


Also, you never mentioned what the current Death Benefit is. You just told us what the Riders are.

How much Death Benefit has that $6k created?
That is the real question...

 

[scmb]

Most likely a loan was taken out and they didn't mention it to you. Call them again and ask. For such a long period you should have a few thousands in cash even with only $15 a month.

 

[scagnt83]

Most likely a loan was taken out and they didn't mention it to you. Call them again and ask. For such a long period you should have a few thousands in cash even with only $15 a month.

Not if it is a non-par policy.

 

[Newby]

You are getting some wrong info here. It doesn't matter if the policy is participating or not ALL whole life policies are GUARANTEED to build enough cash value that they endow (cash value equals face amount) at some point (usually age 100 or age 121).

She has one of two things going on. Either she has taken loans against the policy or skipped payments and the policy took automatic premium loans. Or the more likely possibility is that she does not have whole life at all. Many people THINK they have whole-life but they actually have UL. Universal Life is not whole life. It's not guaranteed to build cash value and is not even guaranteed to stay in force with the level premium (unless it's GUL which came later).

We run into people that have UL all the time who think they bought WL. And no wonder. Many agents selling UL even call it whole-life. I had a State Farm agent swear the UL policy they sold someone last week was Whole-Life because it's renewable to age 121. They simply didn't know any better.

If your mom has UL her biggest problem isn't the lack of cash value. Her biggest problem is that she is about to lose her death benefit and everything she paid in over the past 34years unless she starts pumping a whole lot more premium into the policy. Happens every day.

UL policies being sold to unsuspecting people without a clear understanding between it and whole-life is a black stain on the life insurance business.

Look for the words Universal Life, or Flexible a Premium a Life, or Permanent Life or a UL in the policy number. Any of those tells you it is UL and not whole-life.

 

[Tahoe Ray]

You are getting some wrong info here. It doesn't matter if the policy is participating or not ALL whole life policies are GUARANTEED to build enough cash value that they endow (cash value equals face amount) at some point (usually age 100 or age 121).

She has one of two things going on. Either she has taken loans against the policy or skipped payments and the policy took automatic premium loans. Or the more likely possibility is that she does not have whole life at all. Many people THINK they have whole-life but they actually have UL. Universal Life is not whole life. It's not guaranteed to build cash value and is not even guaranteed to stay in force with the level premium (unless it's GUL which came later).

We run into people that have UL all the time who think they bought WL. And no wonder. Many agents selling UL even call it whole-life. I had a State Farm agent swear the UL policy they sold someone last week was Whole-Life because it's renewable to age 121. They simply didn't know any better.

If your mom has UL her biggest problem isn't the lack of cash value. Her biggest problem is that she is about to lose her death benefit and everything she paid in over the past 34years unless she starts pumping a whole lot more premium into the policy. Happens every day.

UL policies being sold to unsuspecting people without a clear understanding between it and whole-life is a black stain on the life insurance business.

Look for the words Universal Life, or Flexible a Premium a Life, or Permanent Life or a UL in the policy number. Any of those tells you it is UL and not whole-life.

The policy is on him (who is now 34 years old) and it was purchased by his grandmother...

 

[WinoBlues]

My grandmother recently died and I learned she had purchased ME a whole life insurance policy when I was born. For the past 34 years, she had been paying the premiums ($15 a month) out of her personal bank account.
Guaranteed Insurance Option: $10,000. Accidental Death Rider: $10,000

I recently contacted the insurance company and was surprised by how little cash value the policy had amassed: $625.

Is this normal? I've read some less than positive reviews of whole life insurance, but this seems especially bad. She paid in over $6,120 in premiums since she bought it...

Thanks
Scott

PS The current company is Jackson National Life Insurance, but they are just the latest in a long line of companies that have apparently have held this policy.

JNL recently bought a load of policies from ReAssure America.

What you have could be anything. A participating whole life that had the dividends paying out in cash every year, A non guaranteed UL and no they are not all about to blow up, A non par whole life that would probably have less CV than a Participating WL, Or worst a "FE" style WL policy that is not meant to build much cash value.

The policy may have more value as a policy than the $600 in CV. Find a life insurance agent that is willing to review it with you. A 10 minute call to JNL will give you most of the answers. You just need to know what to ask.

Lee

 

[Newby]

The policy is on him (who is now 34 years old) and it was purchased by his grandmother...

Yes, I missed that part. I was making the assumption that an older lady had paid 34-years and only had a little build up. On a policy written on a child that is now 34 I think my answer is about the same but you have a lot more years that you could increase payments if it's an imploding UL.

Find a good local life agent to do a review is my best advice.

 

[NWWAIns]

For comparison:
I personally have a participating WL policy my parents purchased for each of my siblings and I. Mine was purchased in 1983 and a loan(s) were taken out and repaid at some unknown point. It now has a cash value of over $2,200 and of course a face value of over $12,200.