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Whole life insurance policy

By Terry Savage on November 24, 2019 | Insurance & Annuities

What is your opinion of whole life policies? I’ve heard different sides, mostly negative. And if I have one what should I do with it? Thanks for your advice.

Terry Says

the time to ask that question is when you are young and have many years ahead of you to build cash value inside an insurance policy. It costs less to buy term insurance, but it lasts only 20 or 30 years max. You may think your mortgage will be paid off, and your children through college by that time, so you won’t need life insurance any more. But you never can tell if your spouse or grandchildren might be dependent on you — even in your later years. That’s why I recommend a combination — buy term insurance to get the maximum insurance for the annual premium (which remains the same). And buy a “cash value” or whole life policy so someone will benefit when you die!
BUT be very careful that the policy is structured to last your lifetime without needing to increase premiums when you are older! Plan to make large enough payments so that even if the policy accrues interest only at the minimum guaranteed rate, it will sty in force without requiring larger payments later on when you can least afford the increase.
AND, if you have a policy, contact the agent (or the insurance company) for an “in-force ledger” which will tell you how much cash value is inside the policy, and how many years of premiums you must pay to keep it in force, and how long the policy will last.
If you really don’t need the insurance, keep the policy in case you need cash, because you can always borrow cash out of the policy!



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