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 Posted: Fri Jul 11, 2008 9:13 pm Post subject: when to surrender a whole life policy? |
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I have an insurance question:
I am married, age 60, with a $75,000 whole life policy on myself. Premium is $115 a month, and Cash Surrender Value is approximately $20,000. I recall the policy projections showed the cash surrender value would start to erode in my 60's, as mortality probability increases. I also just read that this is common, and to consider surrendering the policy, but no time frame was suggested.
We don't need the life insurance coverage for estate taxes, and my wife's income (she's a realtor) has plummeted dramatically. She's tired of that business, so who knows what the future holds regarding future earning potential (she's late 50-something). Health insurance coverage is a big issue ($780/month just for her - I have single coverage from my employer).
Based on the facts presented, should we consider cashing in my whole life policy? |
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NonsmokinJoe
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| Posted: Sun Jul 13, 2008 3:08 pm Post subject: Surrendering Whole Life Policy? |
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Lots of topics to discuss here... The policy is an assett for you for sure. Ask the company about taking out some of the cash value (loan). you would still be able to keep the policy in force and if something does happen to you, your wife would recieve the benefit minus the loaned amount. Also, at this point, you are actually paying $115.00 per month for a $55,000 policy since you have the cash value built up. Some other things to consider here:
1: Is it the idea of losing a $115.00 bill that is appeealing to you?
2: Have you considered purchasing a single premium whole life policy with a portion of the cash value to cover expenses? ex: take $5,000 out of the policy to purchase a $10,000 policy with no further premiums due.
3: Holy cow, that's a pretty expensive health insurance premium, considered shopping that rate?
e-mail me if you have any questions, trahitt[at]yahoo.com
*email id deactivated for your safety-lakemen
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TraHitt
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| Posted: Sun Jul 13, 2008 9:43 pm Post subject: insurance |
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| Please excuse my 'lack of knowledge' here, but......I din't know you can ACTUALLY surrender a Life Insurance policy. I'm just curious..for what reason would you want to do that? To get the money from it? To get a 'better' ( lack of a better word..) policy....one that may better suit your needs NOW? |
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sdchargersfan
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| Posted: Sun Jul 13, 2008 9:51 pm Post subject: |
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| Quote: | | Based on the facts presented, should we consider cashing in my whole life policy? |
NonsmokinJoe in my *SAFE opinion I would say...
Yes, no, maybe....just to be clear!
Life insurance is about financially protecting mama and the kids
should you suddenly be eaten alive, head first, by a Big Mac Truck;
and/or you simply don't wake up tomorrow morning.
The question to be answered is:
If you don't wake up tomorrow morning will mama and kids,... financially get along just fine,... without your income and the $75,000 from your policy?
If you were my client I'd recommend you apply for 20 year level term insurance. The premium for a male age 60, PREFERRED PLUS NON-TOBACCO, for $150,000 would be $117.73 per month if you qualify.
Once approved...I'd cash out the $20,000 and invest it in whatever is SAFE and sound for the protection of the cash asset or 1035 exchange for a better contract with a No Lapse Guarantee.
Now if you go bye-bye unexpectedly mama and the kids now have a minimum of $170,000 (life ins. + the cash) AND you are paying right at the same amount of money per month so your monthly budget is not affected.
To implement said plan, take a vacation to the Tampa Bay, Florida area and....
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GarySpicuzza
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| Posted: Fri Jul 18, 2008 4:26 pm Post subject: |
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Before you surrender your life insurance policy in order for you to get the cash values, you should try to consider some things. As we all know, life insurance is for financial protection that when something will happen to you, your beneficiaries will still survive by using the money that is from the insurance proceeds. Now the question here is, Is life insurance still a necessity? Do you still need financial protection? If something would happen to you, would your family be financially stable? I think in that age of yours, I assume that your family can now survive with out your financial aid. If you don't see the need for life insurance in that age, you can surrender it and get the cash values. You can use it to additional funds for your retirement. That is one thing that you need to consider. The need for life insurance. We buy it because we know we need it. If the time comes that you don't need it, surrender it and enjoy the benefit that it will give you.
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joven222
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| Posted: Thu Apr 30, 2009 1:06 pm Post subject: insurance cash out |
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my dad has a poilcy thats worth 61,000 he pays 90a month he been paying for 25 years what do think the cash value would be and should he cash out because we need the money now
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t handzs
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| Posted: Thu Apr 30, 2009 8:48 pm Post subject: |
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This is an old thread that got resurrected. What got missed in this thread is that the question is about surrendering a whole life policy, but the question asker has a universal life policy.
thands, you are asking an impossible question without knowing the cash value and other information. If the cash value is $60,000 and he's not about to die, it may make sense to cash it in. If the cash value is $1, it probably doesn't make sense to cash it in. |
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InsuranceExpert
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| Posted: Sat May 02, 2009 2:12 am Post subject: |
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| Quote: | | Ask the company about taking out some of the cash value (loan). you would still be able to keep the policy in force and if something does happen to you, your wife would recieve the benefit minus the loaned amount. |
"Something does happen to you" = You die.
I wish I had a dime for every case I've worked in which someone was enticed to take a loan out against a policy believing they could just take out a loan and the death benefit would be casually adjusted on the back end.
Let's not forget about the little things like premium payments and loan interest.
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InsInvestigator
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| Posted: Sat May 02, 2009 5:45 am Post subject: |
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I'm glad this was resurrected. Important points to consider. Good catch on the UL thing. I didn't catch the rising mortality rates in the OP post. That definitely points to Universal life.
Secondly, Investigator makes a good point. The interest on policy loans usually isn't that bad, it's the "forgetting about it" that's the issue. The interest will compound, and what was a $30k loan ends up being a whole lot more when the insured dies in 25 years. Oftentimes, they'll also take advantage of auto loan provisions to pay for the premium, and that just goes right on top of any existing loans.
If it sounds too good to be true, and you do it anyway, good luck. I will never say that policy loans are always a bad idea, but I will say that you better remember what you did to the death benefit in the end game. And remember (to quote):
| Quote: | | "Something does happen to you" = You die. |
InsTeacher 
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InsTeacher
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| Posted: Sat May 02, 2009 3:05 pm Post subject: |
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| Let's also keep in mind that there is much more risk with taking a loan from a UL policy than there is with a WL policy. Loans with UL policies greatly increase the risk of policy lapses. I'm not saying that a loan with WL doesn't come with risk, but the magnitude is much smaller. |
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InsuranceExpert
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| Posted: Sat May 02, 2009 8:56 pm Post subject: |
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Great follow-ups guys, thanks for the help.
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InsInvestigator
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| Posted: Thu Jul 30, 2009 3:17 am Post subject: question |
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Hi and thank you for your time, I have whole life 150,00 policy paying 175.00 monthly i'm 47 years old, cash value 26,000 and thinking of surrending it, taking cash value out, buying level term policy for 150,000 30 years , paying 84.00 monthly would that be smart or what do recomend?
thank you
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sara
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| Posted: Thu Jul 30, 2009 6:01 am Post subject: |
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Hello Sara, let's take a closer look at your question.
Because there are usually boatloads of "term-ites" watching these posts, I'll try and keep this as simple as possible.
Let's assume you purchased your whole life policy yesterday from a reputable company. You will pay $175 each month for approximately 25 years. Provided you have made these payments in a timely manner and haven't removed any of the equity from your policy, the plan will [probably] become self-sufficient.
This means that at your age 72, you will have spent $52,500 for a $150,000 life insurance policy that will continue to provide coverage until your heart stops beating - whenever that might be.
If you elect to purchase a $150,000 30-year term plan for $84 per month, at the end of the term you will have spent $30,240. A premium difference of $22,260. Sounds kind of simple, doesn't it?
Just remember, in order for this policy to benefit anyone other than the insurance agent and his/her company, you must die before your age 77. Actually, it doesn't get much simpler than that.
Provided you are in good health, the Commissioner's Ordinary Standard Table of Life Expectancies, predicts you will live to be around 87 or 88 years old. The chances of you purchasing another life insurance policy at your age 77 are not very good at all.
In short, if $150,000 is meant to benefit a husband, children, grandchildren or other loved ones, make sure they know (and understand) you need to die before your age 77 so that you can leave them a little something to remember you by.
By the way, if you have been encouraged by Primerica agent to cancel your whole life policy, for one of their term plans, one of the best known life insurance fraud investigators in the United States suggests that you "just say no".
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InsInvestigator
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| Posted: Thu Jul 30, 2009 6:38 am Post subject: |
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Hi Sara..
Obviously it's popular since it reduces the premium rate, but there are certain things that you need to consider-
* Many of the riders that you may enjoy with a WL policy may not be there for a term life policy. Also, the riders that you'd have with term life policies may expire with the term of the policy.
* You won't be able to get loans against term life policies
* No cash value would be generated
* If you'd need to renew this policy at the end of the term the premium may not remain the same and might well be beyond your reach.
So, now it's time for you to think! Roddick |
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roddick
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| Posted: Thu Jul 30, 2009 8:59 am Post subject: |
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Hello Sara, you have received some great suggestions from the posters above. I'd request you to pay hid to what InsInvestigator has suggested.
The problem with term life policy is it doesn’t accumulate any cash value. Also, no benefits would be paid if the insured doesn’t die within the term period.
Term plan can be your choice if your only concern is to pay-off your debts after your death but whole life plan would help you in accumulating asset to pass on to your loved ones.
~ Jeremy |
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JeremyHolter
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