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Odd Insurance Question

August 22, 2011 at 08:29:18
Specs: Microsoft Windows 7 Professional, 2.667 GHz / 3582 MB

I know this is way out of the computing world, but I know there are some really smart people here and I have no idea what I'm up against. (And I'm not sucking up. I've said it before.)

A parent, 11 years old in 1934 pays (actually the child's parents) for 20 years on full life policy. All payed up. The policy was also increased over it's life to $3000. Now, 77 years later the insurance co contacts me and says you have a check coming, but they can't tell me how much it might be for as it won't work in their calculators. (?) The parent died 11 years ago. I had no idea this thing existed.

Can anyone give me an estimate of what kind of money I might be looking at?

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#1
August 22, 2011 at 08:31:33

didn't you already post this many months ago? It kind've rings a bell to me ;-)

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#2
August 22, 2011 at 09:53:40

"they can't tell me how much it might be for as it won't work in their calculators"

Sounds like BS. How can they cut a check if they don't know how to calculate it?


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#3
August 22, 2011 at 09:59:59

XPUser - Different policy. I know, it's very strange but my parents where nuts about insurance. So many policies! I mean I can't even keep track.

But good catch. Last one paid off quite well.

Mickliq - My thoughts exactly. Say they have to do it by hand so it will be a day or two. I'm too impatient to wait so am trying to get a handle on what might be coming. Just had a little over $10,000 in medical expenses and this could be very helpful.

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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Related Solutions

#4
August 22, 2011 at 12:13:36

Too many variables to say. Your scenario is confusing. Is the person that was insured dead or are you just trying to get the cash value on a whole life policy?

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#5
August 22, 2011 at 13:10:08

It was my Mom's policy. She died 11 years ago. As she got older she turned into a mini hoarder. I never saw this policy when I went through her papers as I was executor of her estate.

Apparently it was paid in full ending in 1954 and has just sat there ever since.

They said the check would be here in two weeks or less, but I'm just interested in an estimate. They pay out including interest but I haven't a clue as to the rate, but from the last policy, I calculated it on the really safe side at 4%.

This may be too much trouble. I guess I can wait. :)

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#6
August 22, 2011 at 13:59:30

Three thousand dollars with compounded interest for 57 years should be quite a sum. However, I do not know the formula to calculate and you are just guessing at the interest rate.

One thing to note, there may have been dividends paid after maturity until the time of death, which may cut back the interest.


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#7
August 22, 2011 at 14:24:55

My head hurts. To my knowledge, which is obviously very limited in this case, it has just sat there.

After I thought about it awhile, the reason it may take them a day or two is that they will have to check the interest rates all those years and the rate has changed over time.

So I took an average of 4%, and I'm happy. Going to be interesting.

I found an interest calculator on line and put in the 4% and OtheHill's implied prediction is very close to what I got.

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#8
August 22, 2011 at 18:31:22

For a quick estimate of 4% interest compounded over 57 years try this:

1 - Open Excel
2 - In A1 enter 3000
3 - In A2 enter =A1*(1+0.04)
4 - Click in A2
5 - Hover your cursor over the little square in the lower right corner of A2
6 - When your cursor turns into a plus sign, click and drag down to A58, release the mouse.

A58 shows the value of a $3000 investment compounded at 4% for 57 years.

Click Here Before Posting Data or VBA Code ---> How To Post Data or Code.


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#9
August 23, 2011 at 04:20:50

That didn't work unless it is supposed to be 3200 all the way down. I think I need a way to add the results of A2 to B2,B3 etc.

Am I missing something?

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#10
August 23, 2011 at 04:40:02

I figured it out.

That should cover my bar tab.

Thanks!

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#11
August 24, 2011 at 13:23:43

I'm glad you figured it out because I don't know how you could have gotten 3200 in any cell, never mind all the way down.

3200 is not a number that the formula I suggested will ever produce using 3000 as the starting point.

I'm assuming your final answer was in the 28K range 'cuz that's what I get.

Click Here Before Posting Data or VBA Code ---> How To Post Data or Code.


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#12
August 24, 2011 at 14:43:55

Yes. That's what I got. Actually, closer to 27,000. The 3200 must have been a typo as I was doing other things at the time.

Thanks for your help.

I know I can always count on you folks here. Truly much appreciated for an off the wall question.

Larry

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#13
August 25, 2011 at 18:20:24

If you followed my instructions, the answer has to be closer to (actually, more than) $28K.

Click Here Before Posting Data or VBA Code ---> How To Post Data or Code.


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#14
August 26, 2011 at 06:05:05

Sorry, Went to 57

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#15
August 30, 2011 at 03:33:56

They paid off. Just over $2000. they said that even though it's been paid off for 57 years, they only pay interest since she died 11 years ago. Yet they have had her money and made money on it for 57 years. What a rip off.

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#16
August 30, 2011 at 08:09:25

As I stated above they may have paid dividends to your mom for all those years. My wife has a small paid up Prudential policy that does just that. Otherwise the policy could be surrendered for a cash value. Dividends are a way to keep you as an insured.

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#17
August 30, 2011 at 10:31:26

I think you are correct. Still maddeningly, stupefyingly unfair.

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#18
August 30, 2011 at 10:54:27

Did you also receive the $3000? for a total of $5000?

You need to understand how the premiums on a whole life policy are calculated. The idea is that the initial premiums were low due to the small likely hood they would need to pay off after only the 20 year premium period.
Each year after that the likely hood became more probably.

If the original policy was $2000 then the dividends may have been re-invested into additional coverage. That may be how the policy grew to $3000.


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#19
August 30, 2011 at 11:06:21

I didn't get that as somewhere, the calcs were off. Probably on my side. Anyway, thank you for all your help OtheHill.

Just sorely disappointed.

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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#20
August 30, 2011 at 11:58:47

re: "Just sorely disappointed."

Disappointed that you received a couple of thousand dollars that you had no idea you were going to receive?

There are so, so many people who would love to have their miserable lives full of such disappointments.

Maybe you could disappoint a few of them by sharing.


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#21
August 30, 2011 at 12:05:10

Hell no. They're used to being sorely disappointed. I wouldn't want to raise their hopes for no reason.

Edit - I actually had plans to help around 10 different sets of friends had things gone differently. I can't do that as my circumstances at the moment are not so great financially. But if it does happen in some form later, there are people I will help.

Imagination governs the world.

Napoleon

http://sandyedge.blogspot.com/


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