When I was going through my Mom's stuff, I found 2 insurance policies in my name that I did not know about. I was going to meet with the company in early April but coronavirus had other ideas. Finally able to talk to them today and I got a crash course in insurance terms.
I never paid insurance much mind until recently, other than to make sure I have car, home, and medical insurance. Both of my policies are whole life policies, which means I'm covered my whole life, unlike term insurance, which covers a certain time frame.
One of the policies stopped being paid for in 2006 and the value has been eating away at itself ever since. If I don't cash that one out now, it will continue withering away until it hits a zero balance. The other policy was to be paid over the course of 20 years, which it was, so it has retained value and I'll end up keeping that one.
I now know more about insurance then I ever wanted, but I'm still clueless how retirement accounts work. She had only been retired 10 years but the money to fund her account is gone completely. So, how were they paying her? I get that the money invested over her working life garnered interest, and she actually received more than twice the amount she and the City of Dayton put in. I figure they pay out like a mortgage payment, but in reverse, meaning they use her contributions first, then pay her with interest from other accounts once the original investment is used.
That all seems like legalized gambling on people's lives to me. The company is betting (hoping?) over the long haul that enough people will die quickly enough that they can still be profitable.