I've had a variable investment life insurance policy for awhile now, and I just recently came to understand why they are a bad idea. Now that I'm done beating myself up over this, I'm stuck on what to do about it. The product that I have is this:
AXA Incentive Life Optimizer, Series 149, allocated in a moderate risk portfolio.
The policy account value is at $10,605. (I've paid $16,100 so far in premiums since early 2009, the cost of insurance is around $130 per month so that's eaten up the amount I've put in; in terms of the amount that's been invested after the cost of insurance was taken out, it has actually grown moderately - which makes sense since it's allocated in a moderate risk portfolio.)
Death benefit is 1,360,605 (original face value of 1,350,000+policy account value; all the life insurance I'll need for several years)
I will get no money back if I surrender it because the surrender fee will eat up the entire account value.
So my question is, given that there is currently $10,605 sunk into this, should I:
1. cut my losses and stop contributing and just wait for the cost of insurance to finish eating up that amount? (I calculate it'll last about 6-7 years depending on growth and then I'll just get a term policy through work) or
2. should I continue contributing so that the $10,605 continues to be invested and not lost?
And if I should go with option 2, how much should I contribute a month? Should I contribute only the cost of insurance (around $130) just to keep the $10,605 invested and growing or should I contribute more than the cost of insurance so that I'm also adding a bit more a month to be invested - since I've already made this bed for some time now, maybe the financially smart thing is to just continue lying in it?
If it helps to know, I'm 30 years old this year so I don't have forever until retirement, but I've got awhile.
Thank you for any advice you can give!
AXA Incentive Life Optimizer, Series 149, allocated in a moderate risk portfolio.
The policy account value is at $10,605. (I've paid $16,100 so far in premiums since early 2009, the cost of insurance is around $130 per month so that's eaten up the amount I've put in; in terms of the amount that's been invested after the cost of insurance was taken out, it has actually grown moderately - which makes sense since it's allocated in a moderate risk portfolio.)
Death benefit is 1,360,605 (original face value of 1,350,000+policy account value; all the life insurance I'll need for several years)
I will get no money back if I surrender it because the surrender fee will eat up the entire account value.
So my question is, given that there is currently $10,605 sunk into this, should I:
1. cut my losses and stop contributing and just wait for the cost of insurance to finish eating up that amount? (I calculate it'll last about 6-7 years depending on growth and then I'll just get a term policy through work) or
2. should I continue contributing so that the $10,605 continues to be invested and not lost?
And if I should go with option 2, how much should I contribute a month? Should I contribute only the cost of insurance (around $130) just to keep the $10,605 invested and growing or should I contribute more than the cost of insurance so that I'm also adding a bit more a month to be invested - since I've already made this bed for some time now, maybe the financially smart thing is to just continue lying in it?
If it helps to know, I'm 30 years old this year so I don't have forever until retirement, but I've got awhile.
Thank you for any advice you can give!