Newbie with Life Insurance Question

[powderpuff77]

Hi everyone.
I have a question. My ex-husbands dad passed away and he had life insurance policies on his kids. They became the owners of their policies. I've been given authorization to act/speak on my ex's behalf. (He's got troubles and no address) My ex wants to cash the policy in so I've gone through the motions and I just received a fax from Prudential. After 26 years the amount he would get to cash it in is $163.73. Does that sound right? I'm in Oregon but the policy was taken out in Nevada.

Also, I've not done this before so what kind of questions should I be asking Prudential? I want to be clear when I slap my ex husbands face with this news. He thought he'd be getting much more. In fact, I've loaned him half already

 

[VolAgent]

There really is no benefit to Prudential to lie about the amount of money there is. The real question is, why is the cash value so low. The answer to that would be decisions your ex-husband's father made years ago. The policy apparently wasn't properly funded and eventually was going to lapse when the cash value hit zero.

If you really want to dig into it, ask Pru for an in force illustration that shows every year since the policy began. But really, that would be a case of closing the barn door after the horse has left.

You either get the joy or the anguish of telling your ex he isn't getting much. I guess it all depends on how you feel about him.

 

[Newby]

That's called Universal Life. Prudential has a whole lot of those policies lapsing on unsuspecting people who thought they bought whole-life. But so do all the big companies from the 1980s.

Thank you for playing!

 

[sellinmachine]

Ran into case with similar conditions, loans against CV, lack of premium payments kept up. Executor of estate told me that when she asked the claim to be paid because of death Pru kept telling her that the CV was so low that the policy would lapse on xyz date.

Told her to notify DOI of the facts when death occurred, that interest on those loans stopped when the man died. Later, she told me took less tha 2 weeks to get check she'd been trying to get for 14 months.

 

[BNTRS]

That's called Universal Life. Prudential has a whole lot of those policies lapsing on unsuspecting people who thought they bought whole-life. But so do all the big companies from the 1980s.

Not so fast, this could also be Pru's Variable Appreciable Life. Depends on how old everyone is.

And as much as I like whole life insurance, let's also be honest in noting that the fact this happened is not because they owned UL, it's because they owned UL incorrectly and/or it was sold very incorrectly.

As far as sounding right. Anything is possible. An in-force is going to show you the ledger, from there you can tell if policy loans or withdrawals were taken, or if this was just chronically underfunded.

 

[rousemark]

That's called Universal Life. Prudential has a whole lot of those policies lapsing on unsuspecting people who thought they bought whole-life. But so do all the big companies from the 1980s.

Thank you for playing!

Maybe.. Maybe not.. She didn't state the face amount.. could be just a couple thousand WL.. Don't forget Pru was a debit company and has a lot of small face WL policies on the books..Just checked another company, a $2000 WL on a male age 2 would have cash value of $122.00 in 20 years (the illustration doesn't show yr 26 but extrapolating the increase rate, it would appear to have about $175.00 in year 26)

 

[TDK]

My guess is its either a whole life with a very low face amount or its on eti and running out. Depending on his health you might not want to cash it in at all.

 

[Newby]

Don't you guys run into Prudential UL all the time that is lapsing? It was ALWAYS sold in the 1980s or early 90s. The agent is always MIA for many years. And the people NEVER knew they didn't have whole-life.

I guess I see so much of it because I work with the funeral home. A LOT of people call their funeral home when they don't understand something on their life insurance.

 

[rousemark]

Don't you guys run into Prudential UL all the time that is lapsing? It was ALWAYS sold in the 1980s or early 90s. The agent is always MIA for many years. And the people NEVER knew they didn't have whole-life.

I guess I see so much of it because I work with the funeral home. A LOT of people call their funeral home when they don't understand something on their life insurance.

I am sure there are tons of Pru ULs in trouble that haven't had an agent review in years.. The same holds true for AGLA, Met, Liberty, and almost any other home service based company where agent turnover was and is horrific (and most ordinary companies).. Much of it was sold in the days of the early 80s when the prime interest rate ran anywhere from 15% -20%. Since no one ever thought interest rates would never drop, all the policies were funded with the assumption the policies would pay 12%+.

Just 10 years down the road, interest rates were less than half of what they had been. There wasn't enough compound interest going into the policy to maintain it as projected but by that time the writing agent had quit and no one serviced the policies. Even if there was a new agent assigned the account, they didn't go back and do the service because they didn't want to be chewed out by a policyholder for a problem they didn't create. As a result, letters are going out daily to policyholders across the country telling them they need to cough up more money or loose their insurance.

The fact UL can be underfunded but project to run to 121 on one side of the ledger while running out in just a few years is one of the biggest injustices ever done to the insurance buying public.