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Cash out my whole life policy

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  • Cash out my whole life policy

    I'm considering cashing out my whole life policy started in 1993.
    Amount $25,000
    Current age: late 30s
    Cash out Value: $3500
    Annual Premium: $150

    It doesn't make much financial difference either way to me, but I don't plan to die soon and it is a pain to remember to pay $150 every year.

    No debt.
    Net worth: 7 figures
    Additional Term 2 million at this point (I am not ready to cancel this yet)

    Working, no plan to retire soon. Cash out value would be added to investment plan and assets allocated in that regard.

    I understand the Cash out value is not taxed under income tax. Are there other considerations I should think about before cashing out and getting rid of whole life insurance ?

  • #2
    Correction: If I cash it out it WOULD be taxable income.


    • #3
      Cash value is taxable to the extent that it exceeds the cost basis in your policy. But with 27 years of premium payments the cost basis is $4050 so it's still underwater. Besides, if your NW is 7 figures $3500 is rounding error in your portfolio. Sell and don't look back.