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Inherited universal life insurance policy

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  • Inherited universal life insurance policy

    My husband's father died suddenly and unexpectedly a few years ago; my husband began receiving quarterly bills on a policy his father opened for him as a child.  It is not a large policy: $25,000 death benefit, appears to have been opened in 1984. Premiums now are only ~$30 quarterly.  His dad worked in the insurance industry so assume he knew what he was doing.  I have a few more letters from 1991 and then 2010.  Guaranteed 4% interest although seems to have been better in the past and was adjusted.  The product has changed hands from several different insurance companies: shelby life --> standard life --> madison national --> and now Guggenheim Life.  The last statement is from 2016 and showed the account balance of $4,225, appears to have gotten 2.8% APR after cost of insurance that year.

    My husband has requested the policy information from Guggenheim now multiple times.  All we received was a letter asking us to sign that the original policy was lost and no other documents.  No one over the phone can give him any details about the policy.  We'd like to know more about the policy if we're going to pay premiums even if they're so low.

    The oldest document I have from 1984 states $300 annual premiums, $25,000 insurance and policy loan rate: 8% in arrears (?) and shows projected account balances.  My husband is now 37.  The projected balance of guaranteed cash surrender value at age 25 is $8,134.

    Can someone that understands universal life insurance explain what we have and what are our options with this policy?



  • #2
    Wow - Unless your husband is terminally ill I would cancel the policy (I'm assuming he is healthy) and take the $4225.

    Who is the beneficiary? If you didn't change that it still might be his father. (Don't answer this question, just asking it)

    You're paying $120/yr for $25000 in insurance. It was a bad deal then (kids don't need insurance) and it's a bad deal now. You can stop paying $120/year & get $4225 now. That's a much better deal.


    • #3
      Little policy like that could have just been to make his numbers in that particular quarter or year or something.  Or it was just a superfluous $25k policy.

      Who owns the policy?  Why is your husband getting the bills?  If you husband owns the policy, they should be able to answer all his questions.


      • #4
        Without seeing the policy or a recent statement, here are a few observations that cause me concern about the long-term viability of your inherited policy:

        • In 1984 the policy had an annual premium of $300 and was probably based upon assumptions that the policy would earn an interest rate of around 8% (or more, based upon prevailing interest rates at the time of issue).

        • The fact that it is now being underfunded ($120/year vs. $300/year) and that the interest being earned is probably far lower (probably now earning the policy minimum of 4%, instead of the much higher projected rate of 8% or more) could spell trouble.

        Universal life policies can be tricky. And if not managed properly, they can deplete the cash value over time; leaving you with no cash value and no coverage. Hardly your dad's intention!

        In order to answer your questions, I'd need to see a recent policy statement and possibly the policy. But, I'd be happy to help explain your policy to you and lay out your options. If you'd like to talk, feel free to shot me an email at [email protected]


        • #5


          • #6

            What are your real concerns though? Insurance as the name describes, really, is for protection purposes. If he had passed away his family back then, and now yours will receive a $25K as a death benefit so in a sense it sounds morbid but you put in $4K to date and receive $25K… your rate of return is 625% give or take.

            A man will give you $200,000 cash, right now, for a 1 million dollar life insurance policy!  Should I mail the briefcase full of cash to AXA-Advisors or will you be picking it up?

            Thank you in advance for your help.

            After all, Valar Morghulis.