Question on Whole Life Policy

[Bsumm]

Hello,
My parents got a whole life policy on me back in 1976 with a $10,000 death benefit. The cash surrender value is $7,394.38. Under Outstanding loan amount it states 0. Does this mean the policy premiums are paid off? Also, my wife and I recently got life insurance with much more coverage so I don't think I really need this one. Since I have this new, higher limit policy wouldn't it make sense to cash this one out or are there implications that I am not aware of?

Thanks in advance for your responses!

 

[VolAgent]

The answer you want to hear, "Sure, go ahead and cash it out, take the money and blow it on whatever you want."

The real answer. "It depends. It depends on the policy and your objectives as to what is a better course of action. While outstanding loans being 0 does not mean what you think it does, it might be possible to stop paying premiums and still have coverage. Also, there are other options as well. So really, it just depends."

 

[WinoBlues]

Hello,
My parents got a whole life policy on me back in 1976 with a $10,000 death benefit. The cash surrender value is $7,394.38. Under Outstanding loan amount it states 0. Does this mean the policy premiums are paid off? Also, my wife and I recently got life insurance with much more coverage so I don't think I really need this one. Since I have this new, higher limit policy wouldn't it make sense to cash this one out or are there implications that I am not aware of?

Thanks in advance for your responses!

2nd, It depends. This is where an experienced agent comes in very handy. Cashing it in may make sense. But also doing a rdpu or a SPWL. When does the new policy expire? What dividend option is this old one on? What does your agent say?

As to if it is paid up? Is anyone making payments? What company? There is probably an agent here that knows the plan.

 

[Bsumm]

2nd, It depends. This is where an experienced agent comes in very handy. Cashing it in may make sense. But also doing a rdpu or a SPWL. When does the new policy expire? What dividend option is this old one on? What does your agent say?

As to if it is paid up? Is anyone making payments? What company? There is probably an agent here that knows the plan.

The company is Southern Farm Bureau.
"What dividend option is this old one on?" 'accumulate'
"When does the new policy expire?" The new policy I have is going to be my life insurance for the long haul.
I'm trying to get ahold of the agent to answer these other questions. Any other specific questions I should ask?

Silly question but I will ask anyway:
It says whole life (paid up at 65). I assume that means it will not be paid up until I, the insured reach 65, and not when my father, the owner, reaches 65?


thanks again!
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The answer you want to hear, "Sure, go ahead and cash it out, take the money and blow it on whatever you want."

For it's worth I'm not looking to get a bunch of material items here and blow money. I've got a wife in grad school and a 15 month old baby girl so I'm looking at all resources to get through... Just trying to make the best decision here.

 

[BNTRS]

I'm still not clear on one thing, are you paying premiums? If so how much?

Dividends accumulating at interest was something agents were doing back around the time this policy was purchased (it's a little early) because interest rates were high and it looked better than using the dividend to purchase paid up additions.

This policy is grandfathered from the Technical and Miscellaneous Revenue Act's Modified Endowment Limits, but since it's whole life you can't increase the premium so that doesn't really matter.

Depending on contract provisions, the accumulate at interest interest rate might be attractive to most of today's options.

You should have a reduce paid up option, which would allow you to stop paying premiums (if you are) and keep the cash there (and growing). If you need the cash for something, you'd simply take a policy loan.

Dividends accumulating at interest doesn't give you the tax deferral that dividends to paid up additions would give you. So if you really don't care about the death benefit, this may be one of those situations were dropping the policy makes sense.

 

[WinoBlues]

The company is Southern Farm Bureau.
"What dividend option is this old one on?" 'accumulate'
"When does the new policy expire?" The new policy I have is going to be my life insurance for the long haul.
I'm trying to get ahold of the agent to answer these other questions. Any other specific questions I should ask?

Silly question but I will ask anyway:
It says whole life (paid up at 65). I assume that means it will not be paid up until I, the insured reach 65, and not when my father, the owner, reaches 65?


thanks again!
- - - - - - - - - - - - - - - - - -


For it's worth I'm not looking to get a bunch of material items here and blow money. I've got a wife in grad school and a 15 month old baby girl so I'm looking at all resources to get through... Just trying to make the best decision here.

_assuming_ you are not wealthy and that your new policy is adequate. The $7,000 may be better off in your budget, emergency fund or paying off debt.

Ask Southern Farm Bureau what happens if you change the Dividend option to reduce premium and you max loan the policy. The loan would only be the part of the Cash Value that is not Dividends.

This old of a policy, the Dividends may be more than enough to carry the policy and maybe also offset the loan interest. If you do not need the cash it may not be a bad place to let it sit and grow.

How old are you? And what kind of plan did you buy?

 

[Bsumm]

I'm still not clear on one thing, are you paying premiums? If so how much?

I'll have to find out if my father is still paying premiums. I wasn't even aware he had this policy on me until a couple of years ago...
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How old are you? And what kind of plan did you buy?

37 and the new policy is a term life 250K

 

[WinoBlues]

I'll have to find out if my father is still paying premiums. I wasn't even aware he had this policy on me until a couple of years ago...
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37 and the new policy is a term life 250K

One more thing. Who is the owner? That is who controls the policy and who the check would be made out to.

Assuming you are preferred your term is $19-30.(20yr or 30yr) per month. You may want to consider adding another policy. Maybe ladder term policies ad add a GUL. That $10,000 death benefit is not going to do much now or grow much down the road. Sounds like it did it's job.

By the way the Farm Bureau agent will not have competitive term or GUL to quote you.

Just my 2 cents.

 

[Bsumm]

Thanks for the responses!

 

[WinoBlues]

Thanks for the responses!

If the agent that you worked with on the term is Independent and you have confidence in him/her. Have them advise you. If not, post your state and one of these guy can probably help. Most are contracted in multiple states.

Lee