CardsFan
Thinks s/he gets paid by the post
DW and I bought policies in 1989. $50k each, with the purpose being to pay off the mortgage if one of us passed. I realize now that term life is the better way to go for insurance, but over the years we have maintained the policies.
Fast forward to today:
We are now retired (effective February this year) and my first thought was to cash in the policies, pay the taxes on the taxable portion at low rates, and move on. But as I reviewed the last several years of statements, the cash value is increasing at a little over 5% per year (after subtracting out that years payments). Since we do not need the cash (and probably have more in cash than we should), I am now think we should keep and maintain the policies as part of "cash" holdings. 5% is far better than we could get with a CD.
A few more pieces of data:
- Ages are 60/61
- as an "investment" I calculate we have received about a 4% ROR per year, which was better than I thought it would be.
- Insurance values of the policies have increased to about $70k each
- We have no other life insurance, and don't think we really need it.
- cash values are $29k and $23k (higher for me because I pay a higher premium as a male)
- premiums are about $1k per year total for the two. Planned WR is about 3.2% and this cost is included in our budget.
- current AA is about 65/25/10. I intend to lower the equity portion, so if we cashed out and re-invested it would go into bonds
Any thoughts on this? Is my logic flawed?
Thanks in advance for your insight.
Fast forward to today:
We are now retired (effective February this year) and my first thought was to cash in the policies, pay the taxes on the taxable portion at low rates, and move on. But as I reviewed the last several years of statements, the cash value is increasing at a little over 5% per year (after subtracting out that years payments). Since we do not need the cash (and probably have more in cash than we should), I am now think we should keep and maintain the policies as part of "cash" holdings. 5% is far better than we could get with a CD.
A few more pieces of data:
- Ages are 60/61
- as an "investment" I calculate we have received about a 4% ROR per year, which was better than I thought it would be.
- Insurance values of the policies have increased to about $70k each
- We have no other life insurance, and don't think we really need it.
- cash values are $29k and $23k (higher for me because I pay a higher premium as a male)
- premiums are about $1k per year total for the two. Planned WR is about 3.2% and this cost is included in our budget.
- current AA is about 65/25/10. I intend to lower the equity portion, so if we cashed out and re-invested it would go into bonds
Any thoughts on this? Is my logic flawed?
Thanks in advance for your insight.