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Old 01-25-2009, 08:02 AM   #1
daytona
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Cash value of insurance



I have a general question...if you buy cash value insurance for 25 years at $1600 per year invested with say a return of %5.What is the approximate cash value if you needed to close the policy and take the cash value of the insurance policy.I just need a rough figure,we're having issues with our moron insurance broker.
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Old 01-25-2009, 11:03 AM   #2
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In my experience, cash surrender charges are usually pretty high. Not sure exactly how they calculate them though. Maybe someone else knows....
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Old 01-26-2009, 08:44 AM   #3
daytona
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those who know about life insurance please comment,this is some what important.I just need a general estimate about the cash value if I decide to close the account and get the cash back.
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Old 01-26-2009, 08:57 AM   #4
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this will depend on what the insurance company charges as "administration" Generally though, if you are paying around $120/month, your cash surrender value will be equal to your payments between 6-8 years. If you are paying say $60/month, it will even out around 17-18 years.

Insurance is a waste of time and money in my opinion. Then again, that's because of my 22 year old mentality and probably think that I will live forever.
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Old 01-26-2009, 09:32 AM   #5
daytona
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Quote:
Originally Posted by MiroE36 View Post
this will depend on what the insurance company charges as "administration" Generally though, if you are paying around $120/month, your cash surrender value will be equal to your payments between 6-8 years. If you are paying say $60/month, it will even out around 17-18 years.

Insurance is a waste of time and money in my opinion. Then again, that's because of my 22 year old mentality and probably think that I will live forever.
sooo if Im paying $1500 per year for 25 years how cash "should" I get back.
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Old 01-26-2009, 10:30 AM   #6
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Originally Posted by daytona View Post
sooo if Im paying $1500 per year for 25 years how cash "should" I get back.
ok well, depending on the "admin fee" and the interest rate, and i don't think that they will offer 5% locked in for 25 years... but you should be looking at a minimum of $45,000 up to a maximum $65,000.

personally I think that after 25 years, you will get 1.640606 total payout to total investment after all applicable fees.

Therefore 37,500 times ^ = $61,522.73

This is just quick and dirty math, actual results may vary
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Old 01-26-2009, 10:58 AM   #7
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Miro bro thanks for the info...I hate this insurance broker,he's some what like family but that guy a hole expects ask us to write to write a blank cheque to cover any "short fall" of the policy.I going to call his supervisor and tell him we're cancelling all the policies because of the inept broker.Like some posters mentioned life insurance is useless "investment" term is the way to go.
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Old 01-26-2009, 01:49 PM   #8
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whoa whoa whoa, $45,000?????? $60,000???????????

hold up people.

if it is cash value insurance, the tables will be listed in your policy, already pre-determined.

for example, you should se a page that looks like this.

1st year $0
2nd $0
3rd $100
4th $150
5th $200
6th $275
.
.
.
.
.
.
.
..
.
.
.
30th year $2,000

I wouldn't be suprised if it's Vanishing Premium Universal Life. Investments have taken a plunge and because of that, if you don't FUND the policy it will collapse. If that's the case, the investment portion has been depleted and there is no money in it.
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Old 01-26-2009, 02:05 PM   #9
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Maybe you have cashback option. My broker offered me that since she said I don't need a huge policy at my age. I only took it since I drive the car and thanks to the best drivers in the GTA. lol
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Old 01-26-2009, 11:00 PM   #10
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[quote=davericher20;1254317]whoa whoa whoa, $45,000?????? $60,000???????????

hold up people.

if it is cash value insurance, the tables will be listed in your policy, already pre-determined.

for example, you should se a page that looks like this.

1st year $0
2nd $0
3rd $100
4th $150
5th $200
6th $275
.
.

30th year $2,000

that cant be right..if you paying say $2000 a year for 30 years at 30years its worth $2000 if you wanted to cash out?
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Old 01-26-2009, 11:19 PM   #11
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Don't you know? Primerica knows everything about insurance!
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Old 01-26-2009, 11:24 PM   #12
daytona
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Don't you know? Primerica knows everything about insurance!

????
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Old 01-26-2009, 11:25 PM   #13
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It's a dig from a couple of previous threads on life insurance...
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Old 01-27-2009, 09:21 AM   #14
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daytona, i recommend you proceed like you said with the cancellation of your policy. A blank cheque request is not even a joke man. As for the breakdown that I gave you, that is basically based of the things that I have seen. I'm an auditor, so occasionally I run into files that have me validating fmv of policies, which is basically what you requested, a.k.a. if i were to cash out, how much do i get? The insurance broker, should be able to give you an exact amortization table of what the exact cash value of the policy is at every year (and applicable fees of cashing). But as everyone mentioned, and as you would have noticed, the interest rates are exceptionally low, and as such a 5% interest rate is highly unatainable, but you also have to factor in the "admin costs" of them "working" (bullshit) with your money. The net gain each year (assuming an annual compounding period over the whole term) would be between 2 - 3 % in my opinion, and that really is based on them not having any more incentive to give you more, because you wont get better anyway. Now if you were to run this "policy" on your own, say through a TFSA (because you have a high enough contribution limit) you would for sure get 3%+ (lets assume 3% steady for now) you would "essentially" (there is a margin here because you are contributing monthly) double your money in 24 years. Total value in the TFSA (which you would be getting tax free ofcourse) would be somewhere around 2.2 whereas the insurance policy would net you a value of 1.6. Thus if your total contribution is 40,000 per say, the TFSA would have a value of $88k and the insurance policy would have a value of $64k, the difference here being accountable to they "admin costs".

The main difference though, if you manage it yourself you will get more of the reward, and naturally don't be drawing money out of there , and like all other service industry firms, you gota pay if you want others to do it for you.

I hope that this helps you out man, and for the love of god, don't ever write a blank cheque out to anyone, not even blood related family!

Cheers,

Miro
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Old 01-27-2009, 10:09 AM   #15
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I have had life insurance for 3 years and have built up $500 of Cash value if i ever decide to cancel it.thats @ $30/month
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