[USER]

I have 3 Whole Life insurance policies, which total a monthly payment of $400. I’ve been paying into these for about 15 years.

The policies total $384,000 right now. I still have 30 years until I reach the age of 65, which is when the policies will be fully paid.

I did the rough math of what I would pay by the age of 65 and it’s around $144,000 (that’s from now to the age of 65, does not include what I’ve already paid).

The current cash value is around $25,000.

My question is, should I give up/end these policies and direct that $400 a month into an IRA?

I’m really starting to question the true value of the investment when I look at how much more I have to pay into.

[John]

Many get talked into whole life policies because they don’t like the idea of insurance with ‘nothing to show for it’ when the policy doesn’t pay (like, if you don’t die at a younger age).

But the fact is, investments are investments, and insurance is insurance, and the two should never meet and become friends (except this is sometimes a tax-advantage strategy for very high net worth individuals).

‘Invest’ in the broad stock market, moderated with some bonds if you can’t stomach the full exposure.

For ‘insurance’, $1m or $2m in 20-year level term is super cheap for a healthy 35 year old.

For your situation (since you are already in it), I’d recommend consulting with a fee-only financial advisor who doesn’t sell these things (but knows how they work) that can tell you how best to play the cards you are already holding.

[Mickael]

Why did you get whole life in the first place? Was it for cash accumulation or the death benefit?
Why 3 policies?

Ask if you can do a reduced paid up, stop the premiums and have permanent coverage.

If you’re underinsured, supplement with a term.

DO NOT CANCEL UNTIL YOU ARE APPROVED FOR SOMETHING ELSE!

[Scott]

Yes. Your money will go much farther in the market than paying a very expensive middle man I.e. whole life ins.

[Mark]

Sorry u got swindled. Whole life insurance is trash. It’s not an investment. Whatever is lost is lost. Get out of it ASAP.

invest in stocks and equities and get term insurance.

Insurance and investing are 2 separate vehicles. Anything that tries to do both is a bad idea 99% of the time

[Elie]

This sounds like a very common situation that many people face with whole life policies when they start looking at it from an investment perspective, and why many have strong feelings against whole life and do term only.

My two cents are to calculate what the future might look like, starting today.

Don’t let the emotions of what you’ve already paid, cloud your judgement in determining what will get you to your desired future state.

This is what’s called a sunk cost; you paid it, it can’t be recovered.

And I agree with others that perhaps a fee only CFP may be a good resource for you.

[Sandy]

Please review your options with a CFP. You likely have a few choices and need to determine what is best for you.

[Jay]

It’s really a math problem. Math says for about the same input you get more output over the term at about a 7% return, plus you always have access to your own cash vs taking a loan against a policy.

Whole life is really not worth it.

Term life is and only if you have a family that you plan to leave a legacy to, otherwise not.

[Gary]

I do sell Whole Life, yet mainly to higher net worth people.
I’d you just started it like a year ago or so, I would say stop and shift to investing only.

To be honest, most of the fees and expenses are front loaded, so once you have had them for awhile that’s when they actually give you a good rate if return.

Let’s say you get 6% growing tax free, that’s like getting an 8% return that’s taxable. So I would consider that kinda like your bond fund investment.

It’s going to be very consistent over time and do better than the bond market.

There are two parts that are together yet separate. The life insurance part and the cash value part.

Once the cash value part grows it actually performs well.

Then eventually once there is enough cash it can pay for the life insurance for the rest of your life.

[Laken]

I would seek out an agent that specializes in life insurance retirement plans.

There is a strategy that utilizes LI for the tax benefits and the long term care that is now attached to some policies.

It’s hard to say without looking at the entire picture.

[Arsenio]

Worst “investment” vehicle possible.
Cash out any value, get term life and investment those payments into a retirement account instead.

[Jeremy]

Tough call can you get with a CFP for help. I know what I would do but think a CFP that is hourly might help

[Carole]

If you dont need to leave your heirs any $s or your dependents are older than u don’t necessarily need ins.

unless maube youve exhausted all other controbutions to other tax qualified plans bit sounds like that $400 wougo a long way ito retirement savings.

[Ben]

The worst years of a whole life policy are the first ones as a lot of the fees are front-loaded.

You can call the company and ask for an inforce illustration of how it’s expected to perform.

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