Whole life policy question

[braumeister]

I may already have ENOUGH for each kid. If neither goes to grad school, I have it covered. If both go beyond 4 years of college, I may be a little short depending on length and cost and aid and stipends, etc.

You are a seriously generous parent.

 

[meierlde]

It seems like the questions of whether to buy whole life insurance or whether to cancel a long held whole life policy are very different.

For example, my mom bought a whole life policy, face value $5k, on me 50+ yrs ago. I now own it and DW is beneficiary. I have no doubt that this has NOT been the best use of the premium money that was paid in and would NOT recommend it.

OTOH, today the death benefit is about $30k, the dividends have been paying the premium for many years so there is no longer an annual bill coming in. (We reinvested dividends for many years until they were large enough to pay the premium.) Today, the policy sits in the safe deposit box and if I predecease DW, she grabs it and collects (the insurance company says they pay within 2 weeks of receiving the death certificate) to cover funeral expenses and immediate needs. The death benefit is slowly growing in value because the dividends exceed the premium. So, I've decided to leave it as is. I could collect the cash value and invest it in some other way but it seems like there is no low risk investment alternative that would yield enough additional to make it worth while.

Bottom line = wouldn't recommend buying WL but I'm not cashing in this policy. The negatives are water under the bridge at this time.

One other possibility would be to convert to a paid up policy which essentially means that the dividends would go to buying more paid up insurance.
Once one of my policies reaches paid up status in 2016 (paid up at 65) I intend to convert the other that is paid up at 85 to a paid up policy. If you have the original documents they can tell how much the base policy paid up amount is.

 

[urn2bfree]

You are a seriously generous parent.

No, my wife is seriously generous. I feel like 4 years of college in this day and age is generous enough. I have been outvoted.