Mom and Her Investments

I was visiting my Mom in Massachusetts a few weeks ago and she is still a little unsure of herself when it comes to her investments. She has been living on her own for about 7 years now and thankfully she now has someone we trust to manage her portfolio. I didn't fully realize that until I was helping her go through some paperwork and she showed me several investments she had made before turning things over to " Bill" the financial planner.

To picture my Mom, think of a little old Irish Nana...because that is what she is. She is from an era when you trusted professionals just because they were a professional. That meant that if you were a lawyer you were a good lawyer, or good doctor or a good banker. My Mother in law is exactly the same way and God forbid we should suggest to either of them that they may be a little misguided in this regard.

One of the questionable investments they signed my Mom up for was a whole life insurance policy for $10,000.00 to cover her burial expenses. She didn't want any of us to have to worry about it. That was where she became vulnerable and trusted the insurance agent to tell her what to do.

First off my Mom didn't need it. Second of all the premiums are payable for 20 years totaling almost $20,000. Third it is not a great savings vehicle. Only about 3.5 percent after the first year. That was listed at 5.25 percent. After asking a few questions (and mind you I am no expert at any investments myself) it became clear that she did not understand exactly what she was signing up for nor did she know that it was not really right for her circumstances.

What was her response? Well they were very nice and they said it would be the right one for me. For a moment I wanted to get on the phone and call the agent who wrote the policy....I still may but at the time it would have embarrassed my Mom. So, I settled for gently asking her to not make any more decisions of this sort without first talking to Bill and then also talking to myself or one of my other siblings.

I know that as gently as I put it she felt chastised and then asked if she could get out of the policy. I am working on it.

I love my Mom and I get angry when I see people take advantage of her. I guess I have to step up a little more often and have some of the money conversations with her. None of my siblings had any idea she had done this either.

My understanding is that whole life insurance is often not the right type for many people and not quite the investment vehicle an agent may make it out to be.