Whole life policy cancellation

[harris316]

In my 40s, own a term and whole life policy for 2 mil for term/1.2mil for whole life.

My premium for whole life is 23000 per year and 2250 for term.

At the time, I made a huge mistake and listened to my agent and got upsold the whole life insurance policy. I called massmutal and if I cancel, I only get 7200 dollars back. If I downgrade my benefit for whole life to 250000, it’s 7400 per year and for 500,000, it’s 11000 per year for premium. No cash surrender value

What would everyone recommend? I am married and have children.

Also reason why I want to cancel is the premium is so high and it’s about 25% of my post tax income. I can’t afford it and I want to use that money for fixed costs and investments. Should I eat the 38000 dollars penalty of cancelling the policy?

 

[resjudicata]

@harris316 Omg this stuff is such highway robbery.

Just cancel and get term life insurance. I can't believe people agree to these premiums.

Term life insurance is practically free in comparison.

 

[shaimaaalmahdy]

@resjudicata I found the primerica lol

 

[jwalk33]

@harris316 It’s not a penalty per se. It’s the built in expenses that reduce your cash value in the early years. The only way to recover it is to keep paying! Obviously you don’t want to do that.
You could ask for an Extended Term quote as a settlement option. Same death benefit but its term and the cash value supports the policy X number of years.

Before you cancel your coverage buy a new term policy to be sure you can obtain the insurance and avoid gaps. Then cancel the whole life policy and get your surrender value back.

 

[harris316]

@jwalk33 But I have a term life insurance with the same MassMutual. Would you mean to roll over what I paid already for whole life to term life insurance and pay it out as a settlement option?

 

[jwalk33]

@harris316 If you are able to obtain discounts for low risk factors you may be better off replacing the total amount of insurance you have with a new term policy. Talk with a broker.
Once you have the new policy just cancel the Mass policies.