<prompt> Human: Hello- My 94 year-old grandmother gave me her paper work and asked me to explain her life insurance policy to her. It was taken out by my grandfather years ago before his death. I only put money in my Simple IRA provided through my work, so Im not familiar with this type of policy at all.She has a little over 100k in the account and it looks like shes paying about 1500 per month in premiums and making 2 interest. Does that sound remotely right?!After reading about these types of policies, another part I really dont understand is where does the death benefit come from? Are they just paying out to the beneficiaries the amount that is in the account? If so, it seems like she could put her money elsewhere and make more than 2, AND not have to pay a premium. Also, is the premium going into her account or is that just what shes giving to the insurance company? What am I missing? Am I being stupid? Can someone please explain to me why is this a good investment?Sorry for so many questions, but Im trying to take care of her and I dont want to tell her to move her money if Im just completely missing something.  <response>: If somebody has life insurance at 94 years old, I think its probably a horrible idea to cancel it.Death benefit is some high number that gets paid out if the person dies.Cash value is usually some middle to low number that you get if you stop paying for the insurance. This is most likely what you mean by She has 100k in the account.The 1500m is going to be paying for the difference between the death benefit and the cash value. If you keep paying that 1500, you keep getting that difference if she dies. If you stop paying the 1500, then you just get the cash value and its over.In that way, insurance is kinda like gambling that you die sooner rather than later. Thats no difference than saying that buying car insurance is betting that you crash the car before you could have just paid for a new car yourself with the money you didnt pay for car insurance.I dont know where you are getting the 2 interest figure. Its hard to advise about this.Cash value is a lot like home equity. You pay every month on a mortgage payment and some tiny amount early on goes to equity and late in the life of the mortgage almost your whole payment goes to home equity. At this point, its likely to say that she is late in the game, given her age of 94.A major difference here is that the equity is essentially borrowed by the insurer. They need to somehow reimburse you for that. Sometimes they consider it like a loan and pay you some stated interest rate. Its possible they are taking the money her equity earns and depositing it into some kind of savings-like account. This could also be where you are getting the 100k figure.Its also common for people to have the money the equity earns turn back around and buy a higher death benefit and cash value. You would likely be able to determine this by looking at the death benefit for a multiple year period. If its going up every year, this is probably happening. This is quite common. Late in a policy like this, you would expect a really high death benefit and you would expect that every year both the death benefit and the cash value would be going up much faster than the 1500m she is paying in. It should be easy to see if this is the case by looking at a multiple year history of the policy.Its also possible that the insurer could be using the money from borrowing her equity to reduce the premiums she is paying. I highly doubt this is the case, because she probably wouldnt have to pay anything at this point if it was. You would notice this if the money she has to pay every year to keep the policy going is less and less each year.It should be fairly easy to change what happens there with the money they are paying her for use of the equity. It shouldnt require much more than a call to the insurer and filling out some forms.It could make sense for youher to consider changing the current method to instead be a reduction in premiums you have to pay to keep the insurance in force keep it from being cancelled from non-payment.I would strongly suggest that you try to look at the documents you have to see if they have any multi-year data and if they do then read it and bring it back here and post it.We wouldnt need more than the last 5 years worth of data.In particular, you should be able to fairly easily figure out the death benefit and cash value for each of the last 5 years. Those are going to be the most important numbers to report back to us. 