exisiting whole life insurance policy

ampsonic · #1 (**permalink**) 01-28-2009, 12:31 PM

Hello,

Need a bit of help understanding the situation I'm in.

My wife has a whole life insurance policy, it was started by her dad when she was little, so it's been going for about 20 years.

We are recently married, and have now taken over the policy. A few months ago, we took out a "loan" against the cash value of the policy, at the recommendation of the insurance guy.

Now that I'm becoming a bit more financially savvy, I'm realizing that the "investment" portion of this policy is probably not the best place for us to have money, we could be doing better things with our limited funds.

I want to terminate the policy, using the cash out value to pay off the "loan", and net the rest (about 80 bucks i think...)

Is there any reason to keep the policy at this time? The insurance guy seems very nice, but he's a very good salesman, so I want to know exactly what I want to do before I speak to him.

Thanks!
Nick

Will@Morrow&Company · #2 (**permalink**) 01-30-2009, 12:21 AM

I would not mix your investments and your insurance. It is a good idea to have life insurance as income replacement, but your investments are not going to grow into what they could when you mix the two. I would get a 20 year term policy, and work on investing. Find someone to invest with that you trust. Be skeptical and do some research. Those are the best suggestions that I have.

necogo · #3 (**permalink**) 06-29-2010, 11:18 PM

I agree with Will, Insurance is for protection NOT for investment. Now that you guys are starting a Family get a Term for 20 or 30 years, protect your family and stay out of debt. There is a term product with a nice rider that will keep the income up to 40 years in addition to the lump sum and sometimes is even cheaper than straigth term

SaraLia · #4 (**permalink**) 07-09-2010, 05:36 AM

Insurance that guarantees a specific sum of money to a designated beneficiary upon the death of the insured or to the insured if he or she lives beyond a certain age.

NJH_LFG · #5 (**permalink**) 07-13-2010, 03:48 PM

It is not a bad place to be if you are super conservative. Dump the policy and pay off the loan before the interest eats a hole in your pocket. Make sure you still have coverage or get a new term life policy.

Also depends on which company the policy is issued by.

#6 (**permalink**) 08-03-2010, 06:12 PM

Like the others, I would advise you to terminate the whole life insurance policy. Most younger people do not have any dependents, so life insurance is not completely necessary. However, if you are starting a family, looking into term life insurance policies is probably a good idea. Depending on the length of these policies, they can vary in cost greatly. They are still much cheaper than most whole life policies.

Smart Payment Plan · #7 (**permalink**) 08-30-2010, 05:40 PM

a whole life insurance policy is an investment in the future of your next generation. You and your wife wont benefit, but your heirs will.

jacobbon · #8 (**permalink**) 09-11-2010, 04:12 AM

Insurance give a fixed amount of money at maturity of policy , so my advice is not to surrender the policy, for investment opt another policy, if you surrender the policy you will get less benefits.

licpolicy · #9 (**permalink**) 10-20-2010, 02:32 AM

First of all understand difference between life insurance ,investment and health insurance policy.three terminology are not same.life insurance treated as longer term .its used when something is misshaping with you .that time it gives your family as financial support.

MoneyTalks · #10 (**permalink**) 03-10-2011, 05:44 PM

in accepting advice from financial professionals, you should consider how that person earns his/her income.
Wirehouse guys earn fees from investments. Insurance guys earn commissions from insurance.

Common sense should tell you that a wirehouse guy will tell you insurance is a waste of money and to buy Term only.
Insurance guy will favor wholelife.

Realistically, there is value to both sides. You should research the company it is through and see whether it is worthwhile.

Wholelife can be a fine product. I wouldn't put every penny into one, but..

CloptonCapital · #11 (**permalink**) 03-17-2011, 12:54 AM

Yet again this is another argument where the objective truth is in the middle. If you are a super conservative investor and you've already maxed out your contributions to retirement, HSA and any other low hanging fruit and you have plenty of cash laying around and want a tax-deferred compounding interest LONG TERM investment, than whole life can be great. One last point, just don't get ripped off on the policy.

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