If you are thinking about Whole Life insurance, be cautious!
My grandparents bought a policy for me in the 1990s with $5k coverage, which increased to $10k about 10 years ago. I’ve paid about $17 a month for over 30 years.
Now, the cash value is only $528. The agent mentioned I had over $4k in a “savings account,” but couldn’t explain why I can’t access it, just saying it takes “years” (Red flag #1). When I asked how much longer, given the policy has been active for over 30 years, I got no simple answer.
Also, they can only send me a copy of the policy by mail, not email (Red Flag #2).
I decided to cancel and cash out because the company couldn’t provide clear answers. Over $6k in premiums for $10k coverage and only $528 back is unreasonable. It would have been better to invest that money elsewhere.
Whole life insurance is only beneficial when the feature is pricey.
A $100,000 annual policy will save you 40% estate tax on each premium paid and the death benefit is tax-free when it comes to estate taxes. (If it is within an ILIT)
Whole Life is not for you if your nett worth is less than $13.61 million, or $26 million for a married couple.
If the company is paying for it, it may also be beneficial as an extra kind of remuneration. If not, it is not meant for you.)
Keep in mind that whole life insurance is only ever marketed to you; it is rarely advised.
The product is costly and safe for a limited number of individuals, but it is not a fraud. In order to save for retirement, almost everyone should use tax-advantaged mutual fund accounts and purchase term insurance when they genuinely need it, reducing it as circumstances change.
Having managed my own life insurance and investments, I understand the frustration when dealing with opaque policies. My experience with Whole Life insurance taught me to scrutinize the details closely. I had a policy similar to yours, initially promising a higher cash value over time but failing to deliver. When facing issues like unclear answers from agents and inaccessible policy documents, it’s a red flag. In my case, I eventually chose to cancel and reinvest the funds elsewhere, finding that other investment options offered better returns and transparency. If you’re encountering similar problems, it’s often wiser to review your options carefully and consult with a financial advisor to explore more effective ways to invest your money.