Whole Life Insurance Question

[sh10]

Hi Ladies, I've been working on posting more, so here goes!

I have a Whole Life Insurance policy my parents purchased for me when I was around 7 (I'm almost 27 now). The policy is a $25K death benefit, with $8K in additional paid up value, I'm not really sure what that means though. There is a $2K loan that has been paying the premium for approximately the past ten years. I just got the policy transferred to my name from my dad's. The premium is $115 per year. I also currently have $250K in term life insurance, for a 20 year term policy, 18 years remaining. My husband and I plan to get more before year end, around $750K more each. (We want to have kids in the next few years.) My term insurance is $140 per year.

Do you see any value in keeping the whole life insurance, in addition to what I currently have and plan to get? Thanks!

[SJ]

I am a little confused about the part where you say the $2K loan has been paying the premium.

I wouldn't buy whole life at this point, but for $10/month (or is the premium paid for?) I'd probably keep it.

[sh10]

The premium is $115 each year if paid in full, it's currently $10 each month because it's being paid by the cash value or paid up part. So technically the payout amount would be $2k less due to the loan amount.

[rubytue]

Is it costing you anything right now? From what I read, it sounds like its not costing you you anything because, essentially, the cash value is paying the premiums?

What is the surrender value right now and have you figured out how much in taxes you'd have to pay on that?

If its not costing you anything, part of me says to just keep it and let the cash value continue to pay the premiums. Another part of me says that if the surrender value is high enough (I'm thinking around 6000 +/- taxes), take that and use it to pay the premiums on the new policy. At $140/year that is about 40 years of premiums it could pay. I think I would lean toward the latter option, especially if the term policy had an up-front payment option. One transaction and the whole thing is done, no annual premium and a much high coverage.

[gt7301b]

I would pay this guy $90 for his recommendation:

www.evaluatelifeinsurance.org/

[sh10]

Is the surrender value the same as the cash value? The cash value, which has been paying the premium is around $2,500, so it will only pay it for a few more years. The paid up value I mentioned above is apparently not included in the cash value. I will call them again for more information. Thanks for the reposnses.

[rubytue]

Yeah, I think another call is in order. And I'd suggest some googling first so you know what you are asking about. I don't think many people on MM have whole/universal life policies. I'm stretching back a number of years to a stint writing life insurance illustration software to remember this stuff.

Maybe check out this forum: www.ampminsure.org/life/paidup-whole-life.html. They probably know more.

eta: the more I think about it, the more I lean toward turning any cash value into a new policy. Inflation will eat that $25k away so that it won't really be much when you pass (assuming its no time soon).