When should Whole Life Policies Be Cashed In

[FI_RElater]

...got two of those old "baby" policies that are now over sixty five years old (paid in full probably well over forty years ago)... did get the payout from demutualization

(now that I finished Roth conversions and have started SS ... I'll just cash those insignificant policies out... I got a decent sum from the demutualization already... don't know exactly how little the rest is... but the rate for increase isn't that high, IIR, something like 3%... so can do better nowadays)

seems like a lot of insurance salesman were busy in the 50's... but really, why insure a kid?? makes no more sense today... I guess the parents they preyed upon only said "gee... it's only five bucks a month" (probably taken out by allotment from their monthly paycheck) but those bucks were a lot more precious back then.


The funny thing... just got an email from PRU asking if I wanted to be in a focus group for "long standing policyholders" about something.... I wonder what they would say if I responded in the group as " well, I never chose them.... and certainly can't see why they preyed upon young couples back then... so I might be dubious about anything that they put out now" I suspect that they would try to shut me up sooo fast

 

[JoeWras]

seems like a lot of insurance salesman were busy in the 50's... but really, why insure a kid?? makes no more sense today... I guess the parents they preyed upon only said "gee... it's only five bucks a month" (probably taken out by allotment from their monthly paycheck) but those bucks were a lot more precious back then.

Yeah, right? I'm looking at my policies wondering the same thing.

The only thing I can come up with is "institutional memory." I.E. our parents and grandparents remember when child mortality was significant. They also dealt with the 1918 flu, and polio. By the mid 50s, these crises were behind us and mortality rates have been fairly low and flat since.

Additionally, a funeral was to be done right, and that means a fancy casket. Not cremation.

That's all I got, except to also add this graph from the CDC showing what I mean, and how this generation (along with prodding from their parents) might buy into this insurance.

BTW: look at the graph and see the high rate in the early 1900s. I had 2 great uncles die around 1910, both children. Makes me wonder if that got into the collective DNA of my dad's experience.

 

[CRLLS]

I remember that a couple of years after I got married, my parents turned over to me the insurance policy they took out on me when I was born. The insurance values was $1,000. The cash value was around $500. What did I need insurance for? I had a $10,000 a year job and a $25K whole life policy. We cashed it in and bought that used motorcycle that they never let me have when living at home. We never thought about LI on our kids when they were born. It was just never a thing.

 

[TPerk274]

..seems like a lot of insurance salesman were busy in the 50's... but really, why insure a kid?? makes no more sense today...

My FIL was an insurance salesman...I had to buy a policy before marrying his daughter. Later converted that Term Policy to a Whole Life Policy.

The point of those "kid" policies are to have funds to bury them if the worst happens. These policies are typically term and very small ($5k). They aren't designed to replace lost income due to a death. By the time the kid turns 18 you'll have spent $5-6k in premium. FIL bought one for each of the grandkids when they were born.

Everything is pretty much spelled out in the policy binder and any addendums that come out later. Death benefit may or may NOT include the cash value depending upon the choices you make when you purchase the policy. If not, then either the premium can be reduced or the cash value will build up faster (since your cash value is covering a portion of the death benefit).

While our policies haven't been the greatest of investments, the guaranteed interest rates that were set out in the policy have been pretty darn good since they were written in the 1970s, and the value won't ever go down.