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I purchased life insurance for my three kids back in 1996. Two for $60,000 and one for $90,000. I pay $114 a month for these. I know the return has gone down like everything else and I am really afraid to find out that I was "duped" and the person who signed me up for the policies has made more than the policies. I get booklets and from them that frankly I really don't understand except that like everything that is variable...it is going down. I read somewhere that these types of polcies start to pay off after 15 years and I have had them for 13 years. I can afford the $114 a month so that is not an issue. I am also not looking to make money as much as I am looking to secure something for grandchildren remaining family members etc. I would appreciate any information or advice and suggestion as to how to understand these policies and strategies for evaluating them. I am retiring within a year and need to make sure that I understand where my money is going and how to maximize it. Thanks.
Variable policies are subject to market conditions, which is why they are going down. You need to look at the long term gains for these policies but also keep a watch on the insurance costs as they can eat up any cash value. I am not a fan of variable policies but you can check your asset allocations to make sure they are in a more secure setting and then reallocate them to something you are more comfortable with. If you are looking for them to pay off for your grandchildren, I wouldn't worry too much about the current market conditions as you have what 40+ years to make up any losses.
Thanks for the reply. As I understand your response...as a long term investment...this may still be ok. So I should be looking at where the money is being invested and move it to the most secure at this time. Do I have to go back to the agent that set this up or should i go directly to prudential?
golfgal gives good advice, but we have very different viewpoints on insurance. I prefer to use term insurance for risk coverage and cash savings, bonds, equities and real estate for wealth accumulation. I am not a fan of any cash value insurance and particularly dislike variable life. The fees involved can be really high and I've rarely met anyone who actually understands the cost structure of what they bought.
This is great time for long term equity investments via mutual funds or direct stock investments, especially in dividend paying stocks. The current economic meltdown will pass and a long term timeline should be very profitable. Wasting one's assets in unnecessary insurance commissions and fees is not advisable in my viewpoint. JMO.
I'm with Pilgrim, variable life is in my opinion a rip off. The fees are outrageous and the return is minimal. I would cash them out and invest in something else.
Thank you for your replies...I am following up on this.
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