Aboutleboyd Expertise I can answer questions relating to life insurance, estate planning, business succession/continuity planning and tax-effecient retirement planning. I have advised clients for many years on these areas, and how they relate to life insurance.
Likewise, I have worked with many on Long-Term Care needs.
Experience I have been a top producer for the past 5 years. Prior to that I was the CEO of an international company, having the concerns from a clients perspective (now having been a client of NYL for more than 15 years)
Organizations Society of Financial Services Professional
Million Dollar Round Table
Education/Credentials In addition to an BBA and an MBA from a top-10 school. I have earned the LUTCF, NASD Series 6, 7, 63 and 66 licenses.
Awards and Honors Top Life Producer
Top Long-Term Care Producer
Question QUESTION: My father has a policy on me from 1984 til current 2007. The company told him that at the age of 25 I could cash it in and use it for paying for college. We call to cash the policy in and they told him it has no real cash value right now. It won't start accumilating value until November 2007 and I'm already 26. After 20 yrs of paying into this insurance why is there no real cash value for us to cash it out and can we cash it out?
ANSWER: Jemita,
Without looking at the policy, it is difficult to say whether there is cash value or not. There are several different kinds of cash value policies (called "permanent" policies).
If this is a whole life policy, it would have guaranteed cash value. If it is a universal life policy, the cash value is not guaranteed, because it is based on the premiums paid.
In a universal policy (there are fixed policies and variable policies - meaning you have the opportunity to invest any cash value) there is a minimum premium, that is only used to keep the policy continuing. You can add more to the premium to increase the cash value.
I'm only guessing, but it sounds like this is a fixed universal policy in which only the minimum premiums were paid. This would mean there is little or no cash value.
There is not much that can be done at this point as far as getting cash value from the policy. Your decision now is whether to keep the policy at all. If you decide to keep the policy, you should pay much more than the minimum premium while you are young.
However, the actual cost of insurance has dropped dramatically over the last 20 years. This is because the longer life expectancies. Therefore, the old policy has a high cost compared to today.
If you are still healthy, I would recommend considering replacing the policy with a new policy. Consider that I make nothing from this advice, but I advise purchasing a whole life policy for as much as you can afford. If the death benefit is not enough, augment the whole life policy with a 5 or 10 year term policy. I also recommend purchasing it from a highly rated company. Remember, you're expectations are based on 20+ years and the strength of the company is important. Also remember, that just because a company name is popular it doesn't mean the company is necessarily strong or weak. You can have an agent report what's called the Comdex rating. I recommend a Comdex rating of at least 90. The premiums will be higher than a company with a lower rating, but most likely you will be more satisfied because the policy will likely perform as advertised.
I hope this helps,
LEB
---------- FOLLOW-UP ----------
QUESTION: What if it was an educational policy? Its called the Globe Young America policy. I'm supposed to be able to cash it out for college.
Answer Unfortunately, the name of the policy is not necessarily a good indicator of how well it will produce the desired results. I can't make any judgements about the company because I know nothing about it.
However, considering how it worked (or didn't) and the date of the policy, I would be shocked if it was not a universal life policy.
I know no one likes to talk to an agent because some can be so pushy, but that is what I recommend. Contact an agent from New York Life, Mass Mutual or Guardian. They'll tell you the truth and are watched over by their compliancy departments very closely.
