Life insurance, WL and UL, hold or cash out?

[Dave C.]

Some of you folks may be able to help over this issue.

I have a $25K whole life policy on me written in 1978. I have a $75k Universal Like policy written in 1986. Both on my life. I am 60 years old, my wife is 59. Our kids are out of the house. I really don't need the coverage any longer.

A few facts to paint our picture a bit more clearly:
I will retire in two or three years....my wife does not work outside the home.
Between my 401K, our IRA's and taxable accounts we have roughly $1.1M saved up
I'll have a pension of about $1700/mo when I retire...plus our SS

Oh yes, my $75K UL policy has a $50K rider on my wife.

The cash value on the UL is about $16K right now. The WL has about $14K in cash value. (the UL policy looks like it is going to get more expensive over the next years).

The UL premium has been made by the WL dividend since I bought it.

OK, the question.....should I just cash them in and investment the funds? The WL will be paid "Paid in Full" when I hit 65.

I think I should cash out the UL policy and maybe hold the WL policy. I could let it's dividends pay the premiums on the WL and pay no more out-of-pocket.

That's a lot of information, but your opinions will greatly appreciated!!! Dave C.

 

[mickeyd]

I really don't need the coverage any longer.

Hi Dave,

Easy one. Cash those policies in if you can get a better return on the CV elsewhere or need the cash..

 

[pb4uski]

Hi Dave,

Easy one. Cash those policies in if you can get a better return on the CV elsewhere or need the cash..

Before you act, figure out what your return is on each of the policies ignoring the mortality benefit. As an example, I have a WL policy written on me in 1977 that is currently providing a return of 5.8% (IRR based on the increase in CSV and gross premiums paid).

IMO, a 5.8% rate of return on an A-rated investment is worth keeping, not to mention the mortality benefits to my heirs if something happens to me.

If the rate of return is lower than you think appropriate, then cash them in.