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Whole Life Plans inherited but good?

Home Insurance Whole Life Plans inherited but good?

  • Avatar TechByron 
    Participant
    Status: Other Professional
    Posts: 17
    Joined: 01/16/2019

    I recently had the two attached plans, the $10k taken out when I was born in 1981 and the $25k taken out in 1988, handed over to me after my father died in November. I am trying to figure out if these are decent whole life insurance plans, if such a thing even exists, by determining the current rate of return but the policy form is not intuitive to me. Could someone help explain?

    For the $10k plan, I see my annual premium as $93, the total cash value as $3.8k, the previous annual dividend of $17, and then some “previous total increase” of $127 (is this the dividend plus some amorphous increase in the cash value?).

    To determine the rate of return, should I be subtracting that annual premium of $93 from the “previous total increase” of $127 and then dividing that by the total cash value? If I do that, then I get a piddling 0.9% return. Is that right?

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    #188668 Reply
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 439
    Joined: 06/12/2017
    (is this the dividend plus some amorphous increase in the cash value?).

    Click to expand…

    Yes, it’s dividend plus the contractually spelled out increase in cash value.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    https://ProsperousPhysician.com | (717) 496-0900

    #188722 Reply
    Avatar TechByron 
    Participant
    Status: Other Professional
    Posts: 17
    Joined: 01/16/2019

    Thanks, haven’t seen the contract yet, just those two statements screenshots. Is the way I am calculating the return correctly? The sales rep said it was 4% but it wouldn’t seem to be given the above info…

    #188726 Reply
    Avatar FIREshrink 
    Participant
    Status: Physician
    Posts: 964
    Joined: 01/11/2017

    After 38 years the plan has barely broken even, ignoring inflation. I don’t think you need to know more than that.

    #188732 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4396
    Joined: 05/13/2011

    I’d just consider it a nice thing for your dad to do for you, cash it out, and use it for your financial goals. If you wish to consider keeping it as an investment, you’ll need an inforce illustration to calculate your return going forward.

    Those forms are not an inforce illustration.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #189096 Reply
    Liked by Anne

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