What to do with whole life cash value?

[67walkon]

I am sure this has been addressed here, but I would like some wisdom.

Whole life policies are generally frowned upon here and I now understand why. But I have a really old one and the "return" now is pretty good. The cash value increases annually at a pretty good rate.

The cash value is now right at $90,000. The policy value is $225,000. My wife and kids don't need it if I die as our net worth is pretty good. I have another term policy for $250,000, through work, that I can pick up when I retire on April 1. The term policy costs $1,400 a year and is guaranteed for another 9 years.

So what should I do with the whole life policy? It doesn't cost much anymore as the dividends pay most of the premium. I checked into converting to a spia, but it isn't much money. I've thought about just waiting till it hits $100,000 and cashing it out as $100,000 is a pretty good chunk of money.

What are some good strategies for this thing?

Thanks.

[67walkon]

Never mind. I searched and saw I asked the same question a year and a half ago. Me forgets.

[pb4uski]

If the return (increase in cash value each year in relation to the cash value at the beginning of the year) exceeds what you would invest the proceeds in then it would make sense to keep it. Otherwise cash it in, but before you do check to see if any portion of the $90k cash value would be taxable.

IF you have a DB pension, you might look at electing the single life option (which typically pays more but ends when you pass) and earmark the whole life policy to provide for the pension to your beneficiary (perhaps along with the term policy). You would need to crunch number on that.