My Whole Life Ins. situation and advice request

$750/month in whole life insurance premiums 20 years ago must’ve gotten you a massive WL policy. What’s the death benefit? Has to be well over $1M, maybe $2M. What company is it?

Anyway…

Are you still insurable today? If you’ve been paying $750 a month for 20 years you’ve paid close to $180k, more than the loan of 80k so there shouldn’t be any tax implications with cashing it out and switching to term. Assuming you have a $60k loan and the initial loan was $80k with a current cash value of $100k, you should be ok with canceling it and wiping out the loan with the cash value, leaving you with whatever is left of the surrender value after paying it off.

Congratulations — you paid ~$160,000 for your $85,000 home renovation. Your friend oughta give you whatever the massive commission was that he earned on that enormous sale . Guarantee he earned somewhere around 90%-100% commission that first year.

Obviously, check with the company first to make sure what I just said is correct - if you’re wrong about any of the details you mentioned then I’m wrong too.

Only cash it out if you can obtain additional coverage now, though. And don’t cancel it until that other coverage is obtained and in force, obviously.



I see you edited your post to include

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Id love to pay it off and then start putting those monthly payments into a better investment vehicle

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That’s the problem… whole life is not an investment whatsoever and now you are seeing why. The only parties who make money on a whole life policy are the agent and the company. You’ve been throwing a ton of money down the drain and all you have to show for it is about $180,000 in premiums paid and around a $20,000 refund of surrender value if you cancel it. Sure, you paid for your home’s $85,000 renovation with it but imagine what $180,000 invested in an actual investment vehicle would be worth today… much more than $180k. Not do put you down, just trying to illustrate for others reading this why whole life is a terrible product.

I agree with your thoughts. If you have $2.5 million in term to cover the rest of your working years, you’re good. Of course, check with the company before just cancelling it to make sure there aren’t any other details you’re missing but from what you’ve told me, I think you’re good to cancel it and put that money somewhere else.

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I pay around $750/month insurance premium for the policy

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Man I'm sorry you've been paying that for this long now. For my wife's $500k 30-year term policy we pay $418/yr for it. We got that when she was 34 as well so it takes her to 64.

I would without a doubt figure out a way to get out of that, there's just so much better ways to have your money going to other places.

$750/mo invested in the S&P 500 the last 20 years would be worth over $500k today.

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Still paying that down today—around $60,000 outstanding and interest is %7-%8 I think.

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Bruh, a year ago you could have refinanced your house with cash out or done a Heloc for much better then 7-8%.

If you are in decent health you should absolutely get rid of that policy.

Have you talked to your friend about the options? I'm not in the up and up about insurance but sometimes you have options in regards to moving to something else or a cheaper plan to not lose everything?

Before you make any decisions, ask the company to send you an illustration - both with the current paydown of the debt, and with an immediate full payment of the debt.

Whole life policies take a while to "get going". Taking the loan out probably slowed down performance even more.

I would imagine that the future performance of the policy is less than you could get in the market.

But I would at least give a few minutes thought to getting an HELOC, pay off the policy debt, and having the policy continue to run and see what it could do.

I'm fairly certain the answer will still be to kill this thing... but again... I'd at least take a look at that

I’m a life insurance agent and I haven’t pushed a true whole life product in years. It just doesn’t make sense unless you are protecting your family from estate taxes or have a disabled child that you’ll take care of forever or something like that. 99% of the time it’s the wrong option.

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He should NOT have to pay taxes since he's paid way more into the policy than what he's gotten out of it.

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I know, that's why I said it's a lie.

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putting ~$8400 / year somewhere else over the next however many years is a much better play than continuing to give it to Guardian. Right?

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Resounding YES.