My parents bought a whole life insurance policy when I was a child. It has now transferred over to me as an adult. I did not know this because the mail was still going to my parent’s house and I haven’t lived there since I was 18. I owe them $3k to reinstate it. It’s only $50k, is it worth it ? I am in my late 30s and a single mom of two. I own a house in NYC. I owe about $380k on my mortgage and the house is worth $750k or so. I have a low six figure investment portfolio between 401k, Roth, brokerage, IBonds and CD’s. In addition, I have 8 months emergency fund. I think the cost is around $300 a year to keep the $50k policy current. I believe the cash out value is $29k, what do you guys think should I do?
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You should have a licensed professional review it. Cashing out may trigger a tax bill. You can also consider a 1035 exchange, which lets you transfer it to a different permanent life insurance policy or annuity contract without making it a taxable event.
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this is purely opinion, i’d take the cash value and instead get a 20/30 yr term
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It’s $300 per year for $50k coverage. As you get older, you probably won’t pay less for term insurance than that. I recommend looking at a current 15-20 year level term policy, closer to $500k to $1M, to better cover your current needs.
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You might want to consider replacing this policy with a more modern option, like an IUL from a reputable company through an independent agent. This could provide a higher death benefit, living benefits, and permanent coverage, possibly at a different premium cost. Since this is an asset, research your options carefully before cashing out and choose what best fits your needs.
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So keep it and get term as well?
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How much is the difference?