Whole Life Insurance Policies
Hello Ms. Savage, saw you on WGN Morning News talking about the Capital One Breach and the Equifax Settlement. Also heard you discuss the topic of life insurance and was hoping you could help me.
I have whole life insurance policies on myself and my 3 children. At a seminar I recently attended someone mentioned that I should call up the insurance company and ask them what the cash value was and then call back later and cash it out. I’m confused. Not sure if I have it remembered correctly. Tried to speak to him after the seminar, but that was impossible. Tried to get his contact information from the host, but she wouldn’t give it to me.
Can you assist me? Are you familiar with this sort of thing? I do know that when I miss a payment, they never ask for the missed payment when they send the next bill!
Terry Says
Well, I think you must have a few things mixed up, so let’s see if we can sort things out. Let’s start with YOUR life insurance. I’m presuming you own a life insurance policy on your own life. And that you have named your children (or a trust for younger children) as beneficiary. Do you still need that policy? Are they adults now, with enough assets of their own? If you were to “fall off the planet” tomorrow would you be happy that at least they had the insurance money? If not, then you could take the cash out of the policy and use it for other things (paying taxes on a portion that is earnings).
As for your children –do you own a policy on THEIR lives? A policy that pays off if one of them dies?? Why did you buy that? What would you do with the money (besides pay for funeral expenses) if your child died? If they are young, you would likely be better off putting the money into a 529 College Savings Plan where it would all come out tax-free to pay for college expenses. Do THEY have children who would benefit from this policy if their mother dies? That’s the only reason I can think of for owning a policyon the life of a child.
Ask yourself those questions, get some tax advice before doing anything — and do it directly through the insurance company, not that salesperson, if you decide to cash it in, or borrow money out.
