The parents have never been accused of being the most financially savvy people on the face of the Earth, that said I finally explained to Mom that she had been paying in on a Term life policy for so long she had paid in more money then the policy would pay out in the event of her demise. So the question becomes should she simply account the previous payments as a loss and continue with the policy, or raise the payout benefit or simply try to purchase a Whole Life Insurance policy if she can afford to do so? http://www.smartmoney.com/personal-finance/insurance/term-or-whole-life-8011/
If it is term life it should have a pay out value that she could cash in on now. Becareful though usually the penalties are substantial and you also have to take in tax consequences. I am confused how she would have paid in more then it's worth???? That is unusual.
It is a small policy meant to cover burial expenses over time it is quite easy to surpass the coverage amount via monthly premiums.
given that, it's still very unusual. usually they'll have some sort of payment schedule or at the very least stop payments when the face value has been reached. if not, then whomever sold you the policy didn't do so with the client's best interests in mind. term to cover burial expenses? doesn't make sense unless the person has a known date of expiration, and if that was the case, no insurance company would underwrite such a policy. If this is still a concern i'd just cash out the policy. If you've paid in more than face value, i'd like to hope there is some value to had from cashing out. If you retrieve all the funds necessary, i'd just put the funds into a savings account instead of buying another policy. If you have to buy another policy, or if rolling the existing one into a new one is an attractive available option, i'd consider that as well. I wouldn't go whole life unless you can get some value from the old policy - otherwise the entire time you've been on the term policy would be a waste. I'd find a local insurance guy or licensed advisor in your area that you can bring the contract to for examination. unless you tell everyone here the fine print, i don't think a lot of internet advice would be of help. i hope you get it sorted dude
