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Started By
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re: My Whole Life Ins. situation and advice request
Posted on 8/2/22 at 7:12 am to LSUDMD
Posted on 8/2/22 at 7:12 am to LSUDMD
$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
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.
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
quote:
Id love to pay it off and then start putting those monthly payments into a better investment vehicle
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.
This post was edited on 8/2/22 at 7:17 am
1
Posted on 8/2/22 at 7:29 am to TDsngumbo
Yep, I agree it's a really bad idea for most to buy whole life...it definitely stings if I think about "what if's".
I have ~2.5 million in term already and I feel that is way more than enough for our family. I'm mainly asking if there's anyone who thinks ending the policy now after I've already paid that huge amount into it is a bad idea.
From my perspective it seems like I'd be eliminating both a high interest loan as well as a poor financial decision. I'm 45, so if I keep the policy I'll continue to pay $750/month into it, but if I end the policy I could transfer those payments PLUS the $2000/month loan payments into something else. Hindsight is 20/20, but I'm looking at another 15-25 years of work most likely and I'd like to maximize that saving/investing window.
And to your question, it's Guardian insurance (both the whole life and the term, and the disability)
Actual #'s after just looking again: $705/month premium, $115,000 cash value, $810,000 death benefit
I have ~2.5 million in term already and I feel that is way more than enough for our family. I'm mainly asking if there's anyone who thinks ending the policy now after I've already paid that huge amount into it is a bad idea.
From my perspective it seems like I'd be eliminating both a high interest loan as well as a poor financial decision. I'm 45, so if I keep the policy I'll continue to pay $750/month into it, but if I end the policy I could transfer those payments PLUS the $2000/month loan payments into something else. Hindsight is 20/20, but I'm looking at another 15-25 years of work most likely and I'd like to maximize that saving/investing window.
And to your question, it's Guardian insurance (both the whole life and the term, and the disability)
Actual #'s after just looking again: $705/month premium, $115,000 cash value, $810,000 death benefit
This post was edited on 8/2/22 at 7:34 am
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