insurance question help?

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A $1,000 insurance policy won't build much cash value, even over 31 years. I doubt she spent 30K. That would mean she spent $1,000 a year for 30 years for a $1,000 policy.

She may have spent $3,000 and that would sound about right. Remember, the company was on the line for the whle $1,000 even after the first payment. That's the risk. Granted, after paying in the face value, the company should change it to a "paid-up" policy. They don't have to, that's how they make a profit to pay the agents and keep the lights on.

As for what you should do, I'd get a $25,000 term policy and then cash that other one in and go eat at a Ruths Chris Steakhouse. Usually $55 a plate or more!

A policy which is paid in one installment, is usually set up to pay the premiums with it's own dividends. Somewhere along the line, the investment must have lost value, and it could no longer make its own premiums. Your mom would have had to pay a lump sum, usually quite a bit, to keep the insurance value at it original level. Apparently she did not, so the premiums were taken out of the accumulated value of the policy, and has dropped in value with each premium. Now there is only 174 dollars of value left.

Anyway, that would be my guess. You should get the insurance company to explain it to you.

I think you most likely do not understand that a $1000 policy for 31 years didn't mean $1000 PER year.

At least that's what I'm guessing. Who was the beneficiary? If your mom was the beneficiary, it was never your money anyhow.

It depends on what type of policy she got. Term life insurance does not accumulate any cash value at all. There are other types that do have a cash value, but not until maturity. Find out what type of policy it is, and you might ask an insurance agent what you can do about it. If you get no answers, contact your state insurance commission.

Good luck.

Yep, this is what's called "whole life insurance". That's how it works. Your mom got SOLD, instead of learning about it and figuring out what she WANTED.

If you're 30, you can get $100,000 of 20 year TERM insurance, for about $120 A YEAR. Now, it doesn't build "savings", which is probably what she thought she was buying (heck, it WAS what she was buying), but it's pure insurance.

If you want SAVINGS, or VALUE, put your money in a money market or mutual fund. If you want a DEATH PAYOUT, put it in life insurance.

Define the goal, THEN select the product.

Rip-off whole life policy.

Never ever should have life insurance on kids... except maybe a few grand in a rider on parents policy for funeral.

She was ripped off. Perfectly legal... whole life policies are never good... and they are not meant to be used in the way she used it.

She should have read the policy, or spoke to a professional.

Depending on the exact clause on the policy, or it could have been a total rip off.

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IT PROBABLY HAD NO CASH OUT VALUE, JUST ACCIDENTAL DEATH, OR JUST REGULAR DEATH POLICY