Question Regarding Insurance
Usually I share either my experiences or information I’ve gathered. Today I need your help. I’ve just been made aware of an insurance policy my mom bought in the 1990s, before I had inserted myself into her finances. She thought she had spent about $16,000 to buy a $40,000 life insurance policy. I never did understand why she paid in advance or that much, but as I say, I wasn’t involved in her finances.
Today we learned that it is a Universal Life policy. As I understand it, the company uses her prepayment to pay for the monthly insurance cost. That somehow translates into a policy balance, which decreases monthly. Because of the low interest rates in the past years (they say), the value has deceased more than expected and she will have no value left in a couple of years. AND no death benefits!
Does anyone know anything about Universal Life policies? I know she didn’t understand what she was buying – I barely understand it. She thought she was simply buying a life insurance policy. Do we have any recourse? Was the agent ethical selling this policy to a 77-year-old woman? Help!