What if you already have whole life insurance?

Insurance
#1

I’ve read enough to know that Term life insurance is the way to go. But what if you were gifted Whole life insurance by your parents?

This is my husband’s scenario and because of it, we pay $200 a month as a premium. I recently inquired about switching him from a Whole Life to a Term policy and was told that if we wanted to do this, the Whole Life policy would be surrendered for the cash value, which would be sent to us.

Based on the policy issuance date, my husband has put in $18,140 to date. We would receive back $12,799.06 in net cash value. Is it better to just take the hit, take the money out, and re-invest it in index funds? Would love some clarity on this. Thanks for the help!

#2

@sryllee I’m glad you and your husband have figured out that you can get term much cheaper and invest the rest.

First, shop around for term life insurance and set up a policy. I have found the best way to do this is by using an online broker that gets quotes from several companies on your behalf. I really like quotacy.com because they give you a quote before you enter your personal information.

Once you have a policy in place, you can get the cash value of the whole life policy and cancel it. I know the cash value is less than what was paid into it, and it sucks. Don’t throw more money at a bad product for less value!

With the new monthly premium savings, you can invest it or use it for other goals like an emergency fund or pay off debt.

Good luck!

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#3

Thanks so much for the response! It’s helpful just to have affirmation because it always sucks to lose money. But I totally understand that we will gain more by not having this product in the long run.

#4

@sryllee You’re Welcome! You’ve got this! :muscle:

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