What to do? Life insurance policies

[Koolau]

My plain-vanilla whole life policy (nearly 40 years old) generates all of $50/year in dividends...annual premium is over $1000, and since the dividend has been applied to the premium since the beginning death benefit has increased less than 10%.

So I'll never believe the claim "dividends can pay policy premiums."

Still plan on keeping it since my hefty term policy expires next year.

DW's ins. policy (one of them) was not a whole life (can't recall exactly - maybe universal something or other.) But the cash value was eligible to be invested in several different vehicles (guaranteed income, bonds, conservative or aggressive equities, etc.) The policy was face value $100K and she had it for about 20 years. By the time she eventually 1031 exchanged it for a MYGA, the cash value was MORE than the face value and the policy covered all her premiums as well. A lot of it depends on how policies are structured and also a bit of luck so YMMV.

 

[indiajust]

I rolled my life insurance policy to my IRA. Might want to ask about that as available option. Just the cash value from closing the policy. they mailed me a check and i put into the IRA. Got a 1099 for it but no tax consequences.

 

[VanWinkle]

I rolled my life insurance policy to my IRA. Might want to ask about that as available option. Just the cash value from closing the policy. they mailed me a check and i put into the IRA. Got a 1099 for it but no tax consequences.

You likely gave up a lot of tax free money that will now be taxed when you remove it unless there was a basis reported to your IRA for the premiums you paid into the life policy. I'm not sure how that works, but I hope it works out for you.

 

[Magus]

I have a $1m 15 year term life policy (9 years left) at $27.95/month outside of work and I have ~$1.3 million in life insurance + immediate stock vesting upon death through work that I pay about $30/month for my portion. I have never been able get whole life insurance #s to work out vs just investing in index funds or real estate. Once I retire at 43ish, I'll keep the term life policy for the remaining 6-6.5 years since the cost is stupidly low relatively to the payout, but obviously will lose the company portion (although ~50-60% of my stock will vest by then). DW should be more than fine even without any life insurance in the event I die young as long as she doesn't try to fund any of our family that likes to mooch so no plans to buy more.

 

[mickeyd]

Q#1 Why did she buy this LI policy originally?
Q#2 Does this "need" still exist?

Answer to #1 is probably: I do not recall. Answer to #2 is possibly :No or Don't know.

Get rid of this costly junk.