Question: "I have million dollar life insurance policy. Half of it is term rider and the other half of it is whole. I have pad it for about 30 years now and they are asking for more money. I don't understand why. Please explain."
Answer: (John Halterman, Beacon Wealth Management) "Let me explain what type of policy you actually have. Whole life policy is a permanent life insurance policy. It's designed to build up cash value and designed to have a level premium for the rest of your life.
"A term rider is typically a rider thats just added for a specified period of time. They charge you a low premium in the beginning. Unfortunately over the long haul it does go up. So what it sounds like to me is that you has a policy that was building cash value. Unfortunately the term rider has gone up so much that it exceeds the cash value and it takes out from it.
"It sounds like to me now the policy does not have enough cash value to fund itself and the premiums your were paying are not enough to fund it. So that's what's causing the insurance policy to go up.
"One thing you can do, you can drop the term rider. I know it defeats the purpose of having the million dollar policy. But it will also lower the cost if thats what your number one concern is."