Whole Life Ins.

[73ss454]

Can you guys advise me on the best thing to do with a paid up
Whole Life Policy (500K).
Is there a general rule of thumb as to the best time to take the cash value. (120K)
Or does it pay just to keep it if the money is not needed at this point.
Can it be turned into an Annuity or some other type of vehicle for future income.
I plan on ER next year.
Thanks,
JOE

 

[BUM]

This is a question for your agent to answer. Personally, since ER I've cashed in. I told DW I'd rather spend the money with her now than get a check after one of us dies.

Another option is to ignore it and its cash value will pay the premiums for you. Regardless you paid for it and likely needed the coverage when you were younger. Now you probably don't. The final choice is to have the death benefit go to the beneficiary or take whatever cash is available and run.

BUM

 

[Mr._johngalt]

This is a question for your agent to answer. Personally, since ER I've cashed in. I told  DW I'd rather spend the money with her now than get a check after one of us dies.

Another option is to ignore it and its cash value will pay the premiums for you. Regardless you paid for it and likely needed the coverage when you were younger. Now you probably don't. The final choice is to have the death benefit go to the beneficiary or take whatever cash is available and run.

BUM

I wish now I had never owned any life insurance other than some
term coverage when my kids were small. And, that's not because I didn't
die Unless you have helpless people depending on you, I don't see a
big need. However, whole life has helped me out. When I bought my last
company, the founders had policies paid by the corp. I was thinking of cashing them in until it occurred to me that they were both pretty old.
I left them in place (they were paid up). Both men died within a year.
I was sorry to see them go but it was nice to get those big checks.

JG

 

[Martha]

On of the stupidest investments I ever made was being convinced when I started my job to buy some life insurance in my retirement plan. Finally was able to buy the policy from the plan. Now not sure what to do with it. We are still vacillating on whether to just cash it out.

 

[brewer12345]

73, what it makes sense to do depends on your situation and the specific policy. Do you still need life insurance any more? If not, which company is the policy with and what is the effective return (simply, Dec. 31 cash value minus Jan 1 value, assuming no premiums paid)? If you were to take a loan against the policy, what would they charge you? What would your after-tax cash out be if you surrendered vs. current policy cash value?

 

[73ss454]

Brewer,
It's with Mass Mutual.
Not sure of the loan rates, but I don't need anymore loans.
Trying to get rid of them all for ER.  I'm 56 and want to retire at 57. Next April if all goes well.
The kids are gone and doing well.
The cash value seems to be going up about 7% a year. Not a bad
return at this point.
Do the companies raise the cash value as you age to hope that you cash it in?
I was thinking of keeping it until I needed the money or the family would get the 500K when I depart.
Martha,
I know now that this was not the brightest purchase I've ever made. But it's paid now and I want to do the right thing at this point. Just not sure what that is.
Thanks,
JOE

 

[brewer12345]

Brewer,
It's with Mass Mutual.
Not sure of the loan rates, but I don't need anymore loans.
Trying to get rid of them all for ER.
The cash value seems to be going up about 7% a year. Not a bad
return at this point.
Do the companies raise the cash value as you age to hope that you cash it in?
I was thinking of keeping it until I needed the money or the family would get the 500K when I depart.
Thanks,
JOE

Again, do you still need life insurance? If you do, just keep it.

If you do not, you have a policy with a good, well-managed company that treats policyholders well. Does the 7% increase with or without any premiums you paid? If it doesn't include premiums paid, that's a pretty decent return on a low-risk investment. In that case, I would probably keep the policy, but re-visit the decision once a year.

 

[saluki9]

There are few things that are as a good deal as a paid up whole life policy. Of course getting to the paid up state is very expensive.

The 7% return is pretty common for paid up whole life. (no premiums) No way I would cash it in, you've paid in for the most expensive part, and now you're going to give up the gravy?

 

[73ss454]

Saluki9
Thanks for the reply.
I sort of felt the same way as you but just needed to here it from someone else.
I think just holding onto it untill I need it would be the best way to go.
The cash value seems to be growing at a good pace at this point. The company did say that I may have to put some other monies into it at some point but they are not sure. Depends on what the policy throws off each year.
Thanks,
JOE