My parents opened a life insurance policy for me when I was born. I am just now taking it over and paying the premiums. But I have no clue how it works or functions, and they haven’t explained it in a way that I understand yet.
How does “modified premium whole life” insurance work??? It kind of looks like it has something to do with dividends, and I know I have to pay yearly. Do I keep this insurance or get a different life insurance?
I’m so lost. Can you explain it to me?
Life Insurance Question
May 19th, 2011 at 01:28 am
May 19th, 2011 at 01:32 am 1305765166
May 19th, 2011 at 03:36 pm 1305815787
Personally, my dh has one of those and MIL refuses to cash it out. She was going to give it to us, but we didn't want to pay the premiums. Later I asked her to cash it out. I didn't know much about them at the time. I should have said, "Sure - transfer it in our names," and then cancelled it. Would be better used as college money for the kids. Now like I was going to blow the whopping $2k or so. (She has put in FAR more over the years - than $2k - it's a terrible investment).
It's a rip off - best I can explain it. But you can cash it out. Use the money to buy good insurance.
Shop for term life insurance for the both of you. IT should be pretty cheap. Example, we pay $500 per year for $1 mil coverage. The price never goes up for the term (20 or 30 years).
Whatever the coverage your current insurance is, it will be pennies to replace it with a term policy. Buy a term policy first before you cancel it, is all.
May 19th, 2011 at 03:38 pm 1305815938
I was just saying in the forums though life insurance prices are supposed to be rock bottom now, the policies we bought in our 20s are cheaper than anything we can buy today. We were young and in perfect health - both in our favor.
May 20th, 2011 at 03:57 pm 1305903425
Jerry
May 21st, 2011 at 04:26 pm 1305991560
We pay $160ish a year, and I think I could cash out around $5000 and upon my death it would be $38,000.
How much coverage would you recommend we get? Enough to cover our current debt and funeral expenses? Or that plus enough for a mortgage that we'll (probably) have in several years?