As Good As (Better Than) Gold!

As Good As (Better Than) Gold!
by Kevin Lasko

My dad passed away on July 8, 2011 from a massive heart attack at the age of 89. He was a great man and even better father. He was also an avid coin collector, nothing high end, but he really enjoyed looking at his collection and showing my children. He also had a few 1 ounce gold bullion coins which he gave to me after his passing. He always liked having “a little security money” if anything ever hit the fan!

A recent policy premium notice came in the mail for one of my children in February with a due date of March 1, 2012. The base premium for this policy is $1,727.12 with an origination year of 2000. This is a “plain vanilla” whole life policy with a large mutual company. It has no paid-up additions rider on it so I am “stuck” with only putting this amount ($1,727.12) in the policy. With the run-up in gold over the past few years, I wondered if “cashing in” a 1 ounce gold coin would be prudent to pay for the premium or do I “let it ride,” as gold has done nothing but go up in the last 8-10 years? With the economic problems in this country as well as worldwide it is a good safety net.
I began my research!

On February 28, 2012, spot gold closed at $1,788. This is fairly close to my policy premium with a little extra to take my wife out to dinner. The same day I called up my life insurance company and asked them the following question: “If I make my premium payment of $1,727.12 how much will my child’s policy cash value increase?” After a few minutes, I was told that the current cash value in the policy was $8,776, and with the current payment plus the additional dividends and interest due, the cash value would increase to $11,168. After a little 3rd grade arithmetic, I calculated the difference to be a gain in the policy cash value of $2,392 or $665 above my premium payment.

No decision had to be made. Do I think gold is going to gain an additional $665 in the next year or should I guarantee the $665 gain in my policy now?
Hey dad, your grandchild says, “Thank you!”

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May 2, 2012 · Jennifer · No Comments
Posted in: Gold vs Whole Life

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