Posted by 8N'r--WI on March 13, 2012 at 05:34:32 from (12.104.244.6):
In Reply to: OT Metlife posted by Stephen Newell on March 13, 2012 at 05:09:37:
Stephen---I don"t think it is crooked....more of a misunderstanding of how this policy was designed....
My best guess, from the info you provided, is you own a type of "universal life" insurance..
Premiums that are owed, deposited, etc. are "credited" with what they refer to as "a current interest rate assumption"...
When your parents purchased the policy, the interest rate was much, much higher than what it "currently" is today. When the policy was purchased, I bet the amount that was put in as a premium payment (paid) was sufficient to support the policy costs......based on the "current interest rate"...
Now that interest rates have plummeted, the policy is hungry for premium money. If you don"t feed it, the policy will lapse.
This type of policy has a "cost of insurance" built into it, and is based on the current age of the insured.....as you get older, this "cost" increases....that is why you see the "premium---cost of insurance" continuing to go up...
This type of policy is flexible enough that you should be able to call the Company, ask them what the "Minimum Level Premium" is to support and gaurantee the insurance for whatever amount of years you feel you need to keep it.
This set up pays for all the basic internal costs of ownership, gaurantees the coverage, and doesn"t keep you guessing what the premium will be.
The $18 service fee seems high...but might include other fees like "catch up premiums, etc.
The more the insurance co. needs to handle the premium (monthly, quarterly, annually) the higher the service fee.
Confusing---eh?
For some folks, this type of policy is used as a retirement vehicle....if so, they better understand how it works....
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