/ Ask Terry Questions / Term life insurance–Cash surrender value–cost of insurance NEED ADVICE ASAP

Term life insurance–Cash surrender value–cost of insurance NEED ADVICE ASAP

By Terry Savage on June 30, 2022 | Insurance & Annuities

I need some advice, please. My husband, currently age 74 and a cancer patient with other medical issues, has a $200,000 term life insurance policy. When we purchased this policy we thought the coverage was a sufficient amount, despite the high premiums, again due to my husband’s health issues. Now, it seems that “the cost of insurance ” is requiring us to pay an additional amount in addition to the premiums , to keep the policy in effect. Should I keep the payments up to date until we reach that $200,000 amount of money paid in or cancel now before the next due date of July 6. I feel that the premiums were like a “savings investment ” and I don’t want to lose that money, but I’m not sure if it’s wise to keep paying more in addition to the premium amount. FYI :Quarterly premiums=$1284.00. Additional amount required to keep policy in force = $2877.36. Also, I always felt comfortable knowing that we had life insurance coverage. Not sure what to do. Looking forward to hearing your thoughts. Thank you in advance for your consideration.

Terry Says

Whew, you are in a tough spot. I’m guessing that this was a term life insurance policy — and the “term” likely 20 years– just ran out. There is no savings or investment feature in a term life policy. There is no cash surrender value. It is just “sunk costs.” You pay the premium for that year’s coverage. Forget previous years’ payments. They are like old utility bills — you were kept warm for that winter!

Now, I don’t mean to be morbid but if your husband currently has cancer, I would think you would want to keep this life insurance in force. He certainly couldn’t get life insurance in force. So think of this year’s payments –which seem to total about $8,000 — as buying $200,000 of life insurance for $8.000– for one year.

I hope you can afford to keep paying the premiums — and that it’s a waste of money! But consider your entire financial situation. If he does pass within a few years, will you lose his retirement benefits, for example? this money could make up the difference.



a personal
finance question