Worst life insurance EVER!!!

[Andre1969]

Why the heck would you buy LI on a child (unless they are high profile child actors)? They are not wage earners, their demise has no financial effect that needs to be insured against.

A lot of us are smelling 'sales-person'. That never ends well.

-ERD50

My grandmother took out a life insurance policy for me when I was either an infant or a little kid...can't remember which. I forget the specifics on it, but it was enough to pay for my funeral in the event I died prematurely. Probably should have done term though, rather than whole, as I'm now 44, and can afford to pay for my own funeral.

Next time it comes up for renewal, I'm going to check the specifics on it. For the longest time, the annual payment was only $50 per year, but last year I think it jumped up to close to $200. And, with the way funeral costs have gone up, I don't think it would be enough to cover one, nowadays.

 

[meierlde]

My grandmother took out a life insurance policy for me when I was either an infant or a little kid...can't remember which. I forget the specifics on it, but it was enough to pay for my funeral in the event I died prematurely. Probably should have done term though, rather than whole, as I'm now 44, and can afford to pay for my own funeral.

Next time it comes up for renewal, I'm going to check the specifics on it. For the longest time, the annual payment was only $50 per year, but last year I think it jumped up to close to $200. And, with the way funeral costs have gone up, I don't think it would be enough to cover one, nowadays.

That partly depends on if you want cremation or burial. Cremation runs in the 2-4k range, while burial runs 8-10k. This is why cremation is approaching a 50% market share.

 

[Golden sunsets]

Texas Proud; Are you sure that your Mom has been paying those premiums all of these years? I have a whole life policy (sold to me by my Dad - yup) that has been paid up for many years. I get a bill every year stating what the increased CSV will be if I pay the annual premium and what the increased CSV will be if I elect to use the "accelerated payment method". Of course the increase in the CSV is less if I don't pay the premium.

My Dad sold me this policy in 1971 in order to make sure that "final expenses" were covered. It was a very small policy. It was common back in the day for whole life policies to be sold in order to cover funeral costs. Pretty morbid, but that was the sale's pitch.

 

[imoldernu]

It happened to me... here:
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html#post1272126


excerpt...

I'll start with an example... Whole life policy, with cash value. Trust in God, all others pay cash.
When this policy reach the 30 yr point, rather than taking the cash decided to leave the money in the account, and let it accrue the reasonable fixed interest rate. Verified the cash value (small policy ... thankfully) and just let it sit. Yesterday 5 years later, decided to take the cash value... to be told that the policy no longer existed.
Seems there was a clause that said at term, the policy would automatically renew and the cash value would used for payment. It renewed at an outrageous rate, and the cash value was used up... account closed.
Dumb, yes... but the policy was issued nearly 40 years ago, and well... my dumb.

Read the contract...

 

[2B]

For Texas Proud -

Your mother's policy should have a table showing the amount of her payment that goes to pay for the insurance and the amount that goes to increase the cash value. The insurance part increases as the insured ages. It may be that the cost of the insurance has exceeded her cash value growth. Back in the 1950's interest rates were low and nobody ever imagined the rates that have been seen since. There may have been a low cap on this interest rate.

Yes, you have the worst WL insurance policy I've every seen.

My FIL has an older policy and I anguished over whether it made sense to pay it every year. Since he was in a nursing home, it seemed like the near term likelihood of the death benefit was worth paying for.

 

[LongPrime]

A long time ago, I was reading a book on options- still trying to get through it and got several other books on options. Anyway, right away, the author said that call options is like life insurance-has time value, a strike date, and intrinsic value.

This year I sold a few covered calls. At the time it was to protect my downside risk in exchange of receiving the premium and limiting my upside. It was a good trade until the underlying stock continued dropping past the strike, where upon it became a "worse" option because it encourage me to keep the underlying asset.

LI is an option on Life's worth. At time of purchase the LI had value. Today that LI no longer has much future value but has intrinsic value (the cash value). Hence the quandary either continue to pay the premiium for low future value or collect it's intrinsic value, making the choice the "worse ever"

 

[aja8888]

That partly depends on if you want cremation or burial. Cremation runs in the 2-4k range, while burial runs 8-10k. This is why cremation is approaching a 50% market share.

We were involved in three cremations over the last three years and each one was no more than $900 which included the pick up of the body, cremation, issuance of a death certificate, and delivery to a home address of the ashes in a container.

I don't know how it can cost $2 - $4K unless there are some other services that are performed?

 

[LongPrime]

the life insurance value is $10,000 less the $8800=$1200 for which you are paying $214/yr or a hugely bad return on investment, at this time and future, Alternatively, is the CV of $8800 worth more now vs collecting it in death?

 

[LongPrime]

I bought a prepaid cremation, no services, no urn, plan for my mother. It was an annuity $1200 about 3 years ago. That same plan cost me $900 for my FIL, 7 years ago. I could have bought a plan for $500. I just didn't feel like doing this type of transaction over the phone.

 

[samclem]

I bought a prepaid cremation, no services, no urn, plan for my mother. It was an annuity $1200 about 3 years ago. That same plan cost me $900 for my FIL, 7 years ago. I could have bought a plan for $500. I just didn't feel like doing this type of transaction over the phone.

You sure buy a lot of financial "products" to avoid risk--LI on infants, annuities for yourself, annuities to pay for final services for relatives, etc. Do you buy the extended warranties on appliances, too? Is it possible to buy insurance against a bad haircut?

 

[imoldernu]

Is it possible to buy insurance against a bad haircut?

Is Haircut Insurance Next? – optoblog.com

 

[LongPrime]

^LOL,
Final expenses for relatives- I just don't want to deal with it when the time arrives. I did it because I could do it when I have the mental and emotional energy. I am not sure that I could do it when it comes.

Insurance products exist because I don't like taking the risk. So I layoff my risk for a known amount of money.

It gives the ability to take higher risks and FIRE.

The prepaid funeral is an annuity because the State requires the offering company able to guarantee the payment for services provide. I could care less whether I bought an annuity or LI or something else-( Personally I thought I was buying LI with an assigned beneficiary). I just want the service paid for when I need it.

 

[LongPrime]

Haircut insurance: I shoulda, if I coulda, but the wife'a wouldn'ta like'a it'a.

Got a haircut this weekend from dw. She said that it was pretty good. I said she always gives me a good hair cut. She said, this one is a lot better than the previous haircut-her's .

 

[MichaelB]

The prepaid funeral is an annuity because the State requires the offering company able to guarantee the payment for services provide. I could care less whether I bought an annuity or LI or something else-( Personally I thought I was buying LI with an assigned beneficiary). I just want the service paid for when I need it.

That's a pretty broad definition of an annuity.

 

[ERD50]

...

This year I sold a few covered calls. At the time it was to protect my downside risk in exchange of receiving the premium and limiting my upside. It was a good trade until the underlying stock continued dropping past the strike, where upon it became a "worse" option because it encourage me to keep the underlying asset.

...

Covered calls don't protect against downside risk, unless you consider the premium you receive as an offset against that degree of loss. But that is pretty small on an OTM covered call, which is what I assume you sold, since you mentioned 'limiting your upside' - an ITM call would eliminate any upside (beyond the premium).

Are you sure you understand covered calls? Or was there a typo in there?

OTM - out of the money
ITM - in the money

-ERD50

 

[LongPrime]

^I didn't write the law or even understand it other than several decades ago many paid for prepaid funerals and then the furneral closed . All records of course was destroyed. One nearby funeral home had a bunch of corpses in the basement and the funeral home industry wouldn't complete the final disposition of the body- Big stink about it and eventually the State had to pay. People got upset and a law/regulation became into being. Darn Government, it had to put regulation on how the body is taken care of because the industry couldn't do it.

 

[LongPrime]

@ERD50,
ITM, CC. I collected the premium but the price of stock collapsed before I could change my attitude to a sell. My losses was far inexcess of the premium collected and buy-to-close. SCTY.

 

[aja8888]

Simple phone call and a two page online (or paper) form to fill out to put a cremation in progress. Then charge to your CC and get the points, too. I did three like that, very simple. Prepaying for a future cremation is not necessary and adds cost.

 

[meierlde]

One question, can the policy convert to a paid up policy? That is take the cash value and buy a one premium whole life policy where the cash value is the premium.

 

[GrayHare]

the funeral home industry wouldn't complete the final disposition of the body- Big stink about it

I should think so.

 

[LongPrime]

body =bodies.

 

[redduck]

My grandmother took out a life insurance policy for me when I was either an infant or a little kid...can't remember which. I forget the specifics on it, but it was enough to pay for my funeral in the event I died prematurely.

And, Andre1969 quoted re: his last purchase via Amazon:

Either condoms or my grandmother's eye drops, can't remember which...

Andre1969, your grandmother takes out a life insurance policy for you because she wants to make sure you have a proper burial if needed. And, 44 years later you show your appreciation by buying her a pack of condoms?

 

[Texas Proud]

Texas Proud; Are you sure that your Mom has been paying those premiums all of these years? I have a whole life policy (sold to me by my Dad - yup) that has been paid up for many years. I get a bill every year stating what the increased CSV will be if I pay the annual premium and what the increased CSV will be if I elect to use the "accelerated payment method". Of course the increase in the CSV is less if I don't pay the premium.

My Dad sold me this policy in 1971 in order to make sure that "final expenses" were covered. It was a very small policy. It was common back in the day for whole life policies to be sold in order to cover funeral costs. Pretty morbid, but that was the sale's pitch.

I cannot go back and see if she paid every year..... and even though her memory is failing on some things, she is still pretty sharp on others... this is one where she says she has paid that amount every year....

I tend to believe her on this.

 

[Texas Proud]

One question, can the policy convert to a paid up policy? That is take the cash value and buy a one premium whole life policy where the cash value is the premium.

We are getting some more info in the mail soon... not sure what else we can do.... but since the money is so small we will probably cash out...

 

[LongPrime]

You do know how "paid up" works? =
Dividends (refund of overpayment of premiums per IRS) + amount necessary from CV. Not included in paid-up premiums are the transaction fee for taking a loan from CV plus the prepaid 1st year's interest of the loan (installment calculated) from CV.