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  1. #1
    Join Date
    Feb 2010
    Posts
    1

    Whole Life Insurance Purchased in 88, scam or not?

    My dad was going through some papers recently and found some papers for a "Whole Life Insurance" policy that he purchased for me back in 1988 when I was 6 years old. He says he paid a one time amount of $400 and nothing more, ever. Supposedly we are supposed to be able to "cash out" after I turned 25, which I am over 25. Supposedly that amount we are to receive is $10,000.

    From the start this whole thing sounds like a scam to me. I mean, a one time payment of $400?!?! in 1988? Common sense immediately tells me this is or was a scam and not to even bother looking into this. But my father claims this is legit, and that we should be able to "cash out" this policy.

    My question to this forum is, is there ANY possibility that we have any legitimate claim to this policy? Does it even exist, or was this a scam from the start? Could this have been a company that no longer exists?

    UPDATE: I looked up the company, and they were purchased by another company in the early 90's. THAT company was purchased by some other company, which seems like a legitimate company.
    Last edited by Derektion; 02-23-2010 at 02:29 PM.

  2. #2

    Re: Whole Life Insurance Purchased in 88, scam or

    Hey derektion, i'm curious, how did this turn out? I'm a licensed life/health agent in FL and i think it's very possible. Life insurance tends to benefit on the time value of money- in other words, the better insurances will not interrupt the compounding of interest.

  3. #3
    Join Date
    Jul 2006
    Posts
    7,767

    Re: Whole Life Insurance Purchased in 88, scam or

    but why make it insurance? many people live on trust funds. recently one lady called in to a radio investment show and said she had never worked - her father opened a trust fund for her with $5000 when she was born in the early 50's. i don't know if more was added later or if it just compounded, but she is close to 60 now and never worked for anybody.

    how much would you have to deposit now to support a child thru life later?

  4. #4

    Re: Whole Life Insurance Purchased in 88, scam or

    Quote Originally Posted by mumbles View Post
    but why make it insurance? many people live on trust funds. recently one lady called in to a radio investment show and said she had never worked - her father opened a trust fund for her with $5000 when she was born in the early 50's. i don't know if more was added later or if it just compounded, but she is close to 60 now and never worked for anybody.

    how much would you have to deposit now to support a child thru life later?

    It depends on the age of the child and what kind of insurance you choose. For example, my favorite client is age 3. $50 a month goes into his Indexed Universal Life policy or "savings account" until he's age 66. At age 67 he will be collecting about $214,000 a year TAX-FREE every year until he dies or reaches age 120, whichever comes first. do you think he'll out-live that yearly "income"?
    So if you do the math it looks like this:
    $50x12= $600 per year for 63 years = $37200.00 at age 67 you stop saving in the account and draw $81,975.00 a year tax-free for 33 years (assuming he dies at age 100) = over $2.7 million was taken out while living. Now the death benefit will grow to over $1.9 million as well- so when he dies he leaves his heirs an estate of almost $2 million TAX-FREE . So, for an investment of $50 a month for 62 years, a return of almost $4 million is generated over time. This is the simplified answer to your question because there are obviously more details, but it is not a difficult concept. It was invented by E.F. Hutton out of necessity to evolve the life insurance industry and to be able to compete with the government regulated retirement system developed in 1974 which pretty much wiped out pensions and put the evil 401k in effect. These IUL's will never risk the principle of you money or gains- that's why they are offered by only insurance companies and licensed insurance agents- The life insurance aspect of it is the "magic" behind making these TAX-FREE. Again, there is a lot more to it than this brief explanation but it really is not that difficult.

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