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Thinking of dumping my big whole life policy

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  • Thinking of dumping my big whole life policy

    4 years ago I was sold a big mas mutual whole life policy. It has a 5 million death benefit and I pay a little more than 50k into each year. I believed at the time it would be a smart investment for the tax benefits at retirement. So far I've payed over 200k into it and if I dump it now I will loose 67k of that. I've read on WCI about the whole life enough and am considering dumping it and going back to a cheap term policy.  any advice?

  • #2
    Yes - follow your instinct and count yourself lucky to lose "only" $67k before you dig the hole any deeper.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Wow! $50k/year, that smarts!



      • #4
        Ignore sunk costs.  Look at the future value of getting your cash back and payments after investing them.  You'll be able to see a break-even point where if you live past it you win, given your growth assumptions.  But keep in mind all the money you get back and put into an investment is yours.  In a WL policy it's not yours in total.  Depends on your retirement goals and what you want to leave for your kids.  Good luck.  Did this earlier this year with a WL policy and haven't looked back since.


        • #5
          Is this $67k loss deductable in any way?


          • #6
            Can you please elaborate a little more on how to 1035 this to an annuity to use as deduction. Kicking myself hard for falling for this.


            • #7
              I have been reading many of your posts regarding whole life insurance and wanted to see if you would be willing to weigh in on my specific situation.

              I am 44 years old and have had a 1M whole life policy with NML since 2003, with an annual premium of $13,180.  I am of the mindset to terminate the policy at this point and cash out the policy.  I have paid 14 years of premiums thus far with a cost basis of approx. $184,000 and a cash value of approx. $200,000 (per the NML website).  I have debated cancelling the policy many times in the past few years, but did not do because of the high costs in the first few years, etc.  At this point, I feel like I should do so.  I'm irritated with myself for ever buying the policy and regret the loss in return I have given up not having invested that money in the market over the past 14 years.  However, I think it is still best to cut my losses at this point and at least invest the money in the market going forward.

              Thanks for any advice you would have.