Evaluating whether to keep Whole Life my Dad bought for me

[writingforlife101]

Background:
I’m a 30M, recently married, no kids but trying. Wife is in school and makes about $70k a year, I make about $200k a year.

My dad mentioned he’s taken out 4 (whole?) life insurance policies through Northwestern Mutual in my name throughout my life time. Now that I’ve turned 30, he’s turning them over to me, either to continue to pay or cash them out. I don’t think they fit my goals, but I want to make sure there’s not some value in keeping them (or at least some of them) before cashing out.

My thought would be to cancel all except the oldest one, and instead just get like 40 year term life?

Policy 1:
- Policy Name: 65 Life
- Date: 12/20/1993
- Basic Insurance Amount: $31,217
- Total Death Benefit: $57,410
- Accumulated Value: $9,797
- Monthly Premium: $20.60

Policy 2:
- Policy Name: 65 Life
- Date: 3/5/2017
- Basic Insurance Amount: $50,000
- Total Death Benefit: $52,839
- Accumulated Value: $2,145
- Monthly Premium: $52.29

Policy 3:
- Policy Name: 65 Life
- Date: 11/19/2018
- Basic Insurance Amount: $50,000
- Total Death Benefit: $52,185
- Accumulated Value: $1,822
- Monthly Premium: $55.89

Policy 4:
- Policy Name: Whole Life Plus 100
- Date: 11/20/2021
- Basic Insurance Amount: $50,000
- Total Death Benefit: $50,427
- Accumulated Value: $83
- Monthly Premium: $52.89

 

[aladinair]

@writingforlife101 Keep them. You're only 30, they're performing well and you're paying under 200 monthly.

 

[ativyl]

@writingforlife101 Old insurance is generally a great asset. The bad years are the first 2. These are very likely strongly cash positive each year, tax free and you can take out policy loans. If you hate the idea of whole life after researching it at the very least move this to a VUL with them if you want to be more aggressive. See if they will cut you a deal on combining the 4 into a VUL... Do not cash out and lose all the accumulated benefits. You have about $3600 in reserves and commissions you would be losing.

Basically learn a bit and then decide on what the proper course of action is. Cashing out will almost never be the right move.

 

[jeshurun1111]

@writingforlife101 Sit down with the Northwestern Mutual agent and have him explain how everything works with the specific policies, and where they are projected to go in the future. You should keep these.

 

[taylors]

@writingforlife101 These are great. Not sure why you’d want to cancel these for something you would likely outlive resulting in a waste. Whole life insurance works when you do it right like your dad did, payments are cheap compared to what you’d pay for a high dollar term. Not to mention the interest will compound nicely.

 

[resjudicata]

@taylors This just isn’t true. These are not cheap compared to a high dollar term. And WL insurance component is Decreasing Term. He is likely to outlive the insurance component of these policies anyway resulting in taking on the risk himself with the cash value.

 

[levnishbar]

@writingforlife101 Personally, I wouldn't cancel those. Are you maxing out your 401k?

 

[resjudicata]

@writingforlife101 Whole life is decreasing term with a fixed cash value that is generally has a loss the first 20 years and with an average 1.3-3% return over the lifetime of the policy. Ask yourself. If it was decreasing term, with that kind of losing return would you keep it like that or could you do something better with the cash?

 

[ladyeag]

@resjudicata Everything you said is true, it's right on the insurance test. Not sure why you are getting down voted.

 

[resjudicata]

@ladyeag Because it’s not what people want to hear.

 

[angie4777]

@writingforlife101 I’d 1035 exchange them for a universal policy with a bigger death benefit.

 

[vbytuffff]

@angie4777 Like this idea. Can 1035 all of them into one higher DB VUL with likely no further premiums necessary.

 

[hannahjane]

@writingforlife101 Heads-up: You probably inheriting a tax hit if you surrender that first policy. I’d ask for the cost basis.

I personally have a boatload of term and about 125k (started at 100k) of permanent. I’d keep at least policy 1 because that is dirt cheap coverage it can be your final expense coverage or a nice donation to your favorite charity at your passing.

Policy 4 is cheaper than policy 3 because it’s structured to be paid to age 100 where I suspect the other 3 are pay to age 65. I’d drop that one like a bad habit.

 

[dar858]

@writingforlife101 Would you invest $150/month for $150k return… actually more. You’re not going to miss the $150/month.

 

[ladyeag]

@dar858 He could be properly insured for less though

 

[ladyeag]

@writingforlife101 Do a DIME calculation, get the proper amount of life insurance in a 20yr TERM policy, make sure it isn't one of those funny ones that changes after 5 years. Once approved cancel those and start investing in your ROTH IRA.

In your ROTH invest in VUG, VOO and QQQ

 

[tannerking1]

@writingforlife101 just pay them off