according to fidelity, investing $1200 a year ($100/month) for 20 years would give you about $60,000 at the end, assuming an 8% return. so if you can "invest" that in life insurance and get a guaranteed $150-200k, i'd say go for it. of course, this assumes she lives the full 20 years - if she (god forbid) dies earlier, you get a better financial payoff, but if she lives to 130, it might not work out so well. pretty macabre stuff, this life insurance game...
ETF is right, you need to run the math. If insurance companies lost money on average, they'd go out of business. So on average, you will come out behind paying premiums in hopes of the big pay-off. You are betting your mother will die sooner than the average woman her age in her health would. Let's show the numbers each way. We'll assume an 8% average return on your investments, and that $60/month buys $200K worth of 30 year level term life insurance (this figure taken from term4sale.com). We'll assume your mother is 50, and that her life expectancy at this time is 80.2 (taken from an actuarial table) If your mother dies in:
10 years, your investment would be worth $11,000 and the life insurance would pay $200,000.
20 years, your investment would be worth $35,000 and the life insurance would pay $200,000
30 years, your investment would be worth $89,000 and the life insurance would pay $200,000
31 years, your investment would be worth $98,000 and the life insurance would pay $0.
40 years, your investment would be worth $209,000 and the life insurance would pay $0.
Make your bet, but realize there is a reasonable chance you will lose it. If your mother is in such poor health that she will surely die in the next 20 years, she probably isn't insurable.
