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Insurance Education

By raidergreg69 - League Admin
5/07/2020 5:20 pm
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.

Re: Insurance Education

By tribewriter
5/10/2020 8:58 am
meaning they use her contributions first, then pay her with interest from other accounts once the original investment is used.


That is exactly how the Ohio Public Employees Retirement System was explained to me. At least, as much as I understood.

Re: Insurance Education

By raidergreg69 - League Admin
5/10/2020 11:45 am
tribewriter wrote:
meaning they use her contributions first, then pay her with interest from other accounts once the original investment is used.


That is exactly how the Ohio Public Employees Retirement System was explained to me. At least, as much as I understood.


Lol yup, I'm dealing with OPERS and we did get the max death benefit split with me and my brother. The letter they sent with that confuses me even more, talking about unused untaxed contributions and how we get some huge tax credit on her 2020 taxes. I'll have the lawyer explain it to me next time I talk to him.

Re: Insurance Education

By setherick
6/27/2020 6:54 pm
raidergreg69 wrote:

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.


Actually, insurance companies are betting on the exact opposite. They are betting they can get enough people to buy into insurance plans without ever having to pay any of them out.

Interestingly enough, life insurance as we know it actually replaced a stock market form of legalized betting on when someone was going to die. The invention of the actuarial sciences combined with a strong publicity campaign popularized life insurance among the growing middle class in the mid-19C.

The standard rhetoric of the life insurance commercial - who is going to take care of your family when you die - was strong as early as the 1830s.

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I hope you were able to work out the rest of the insurance questions. Life insurance is a legal morass when you need to actually cash it out.