Can whole Life insurance be cashed out?
Can whole Life insurance be cashed out?
My father has a Whole Life Insurance policy he opened when I was born for me. IT was for 50k and I am 34 years old now. What good is it to me now? Can I cash it in for money? Should I continue to pay it? What are my options?
My father insist that it is work at least half the face value.
A little insight please.
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6 Responses
2.1.2010
Yes you do have a cash value in the policy.and you may be able to access the cash with out penalty.My father did the same for me, I'm 40 now and have about 89K in there now.I kind of glad my Dad did it. I look at it like this .1. If I die my family gets a tax free benefit.2. if I live to a old age I get to pull the money in a tax free retirement income for the rest of my life and 3. I can access the available cash when I need it and pay my self back instead of a bank. Between a roth or your life insurance in my opinion they are the best way of saving for tax free retirement income. that's why I don't fund my 401k to the max anymore only to the company match. the bad thing is I make to much money(93K +) so I can't even do a Roth now, so all I have is my Life insurance to fund it. let me give it to you this way…… Is taxes going down in the future or are the going up????? Give your Dad a pat on the back and say thank you. Source(s): My Dad CPA
2.1.2010
Do you have any information on the policy? If it is a whole life policy you should be receiving annual statements that will include a surrender value. The surrender value is what you would receive if you cashed it out. Keep in mind if this number is greater than the premiums that have been paid then the gain is taxable.There are many reasons to keep it in place such as having the insurance, growing money on a tax favorable basis, etc.Your options are to either cash out the policy, continue paying the premiums or contacting the company about not continuing to pay premiums but keeping the policy in force. This can be accomplished two ways, either having the cash value pay the premiums, if there is enough or reducing the policy to paid up with means you never have to pay any more money again but the death benefit takes a hit in the short run.Hope this helps, please let me know if you have any questions. Source(s): http://www.evolutionofwealth.com
2.1.2010
For a whole lift policy part of your premiums go towards insurance and part goes towards building cash value. But as you age, an increasing amount of it goes towards insurance and decreasing amount towards cash value.Cashing out a whole life policy is called surrendering it. If you have not had the policy long enough, there may be surrender charges. A portion of the cash value would likely be taxable (the amount it has grown beyond the portion of premiums that went into it).I surrendered a whole life policy to start a Roth IRA and pay off some bills. But it was at an age when insurance premium was increasing and amount towards cash value was dwindling and I did not really need that insurance. I would rather put the whole amount of the premiums into my Roth IRA.
2.1.2010
Who still owns the policy? If your father owns it, than only he can cash it in.Only the policy owner can cash in the policy. To find out how much it's worth to cash in, you'll need to call the company and ask them. Only the policy owner can find out this information.After paying for it for 34 years, it's possible that the cash value is $25,000. But not likely.
2.1.2010
If you read the actual policy, you will see that it contains a cash value table that tells you cash value vs. years in force.
2.1.2010
talk to the insurance company