Whole Life Insurance Policy
I have a whole life insurance policy with American Family. I am 87. The cash value on the policy is $15633, the surrender value is $16,519. The current dividend is $127. Am I better off cashing in the policy and buying I bonds before May 1,2023. The death value is only increasing $750 per year.
Terry Says
This is a tricky question and it depends on the terms of the policy.
Typically for whole life plans, the policy is designed to endow at maturity of the contract, which means the cash value equals the death benefit.
If the insured lives to the “Maturity Date,” the policy will pay the cash value amount in a lump sum to the owner.
You didn’t give me the “face value” of the policy. And I don’t know if there is a “maturity date” — at which point you may get a payout whether you want it or not (and be liable for income taxes) if you are still alive.
You need a good insurance agent to advise you on the terms of this policy. Contact the company and ask the above questions —
including: If I cash in the policy now, what amount is taxable? And Is there a maturity date — and what will you do when it reaches that date.
DO NOT allow yourself to be switched or rolled into a new policy!!! Just ask for the facts. And then please write back.
PS. There is one more consideration: Do you need the money now more than the beneficiary you named on the policy needs it after your death??
