Life Insurance conundrum

I’m thinking we messed up or this could have been handled better. Some responses may say “ask your agent”, but that is a different issue so we’re looking more toward the company.

For background, my FIL was a successful life agent, who went from an employee of a large carrier in the late 1990’s to a small (now defunct) independent agency for about 10 years before retiring. He left behind several life policies and annuities, but he did not explain nor leave directions to his wife or other family members. He died in 2016, and we were left to find and handle these policies. His wife died early this year at the age of 91. My wife is the executor and I do most of the research. We have had financial advice (mostly on annuities and investments) and most things have gone well.

The policy in question is a “last to die” policy, which was originally issued in 1995. At that time, we think a hunk of cash was used from a prior policy, so there was also an investment component. Even to this date, there is a 4.0% guaranteed return, and the generated interest pretty much covers the cost of coverage.

The 1/1/2024 Annual Report from the carrier of this policy contains the following:

Specified Amount: $170,000

Death Benefit: $170,000

Loans: $0.00

Death Benefit Option 1

Cash Value: $95,000

Net Cash Value: $95,000

Surrender Value: $95,000

We have no record of receiving this report in January, so we had to ask for it after my MIL’s passing. To be fair, we have received prior reports, and the information was always similar. We have made a life claim, which is pending, but we belatedly noted a concern.

When looking at a couple of other life policies, we noted the Death Benefit was higher than the Specified Amount, as the Surrender Value had been added back in; and one line says Death Benefit Option 2. Of course, this Benefit Option was on all policies, but we didn’t realize the difference nor did the carrier ever send us an explanation of terms.

My question is whether we could have accessed this Cash Value before making a life claim? Possibly, could this have been done with a loan? Does the carrier have a duty to note the absurdity of these values?

submitted by /u/boo_sommelier
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