Cashing out life insurance policy

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DMDiller
Member

posted: Apr. 28, 2008 @ 7:10a

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I recently discovered that my parents took out a whole life insurance policy on me when I was younger and I had some questions about cashing it out.

I'm 21, have no dependents, and am still in school right now. I don't know much about life insurance, but I do know that life insurance is primarily to financially help any dependents you may have in the event of death - cover bills, etc etc. Since I have no dependents, I am debating cashing this policy out and using the monies to help pay for school (to avoid student loans) and also investing upwards of 60% of the value.

Is this a stupid idea? There is an investment portion to the life insurance, but I think that a different investment vehicle like a Vanguard account would be more suitable for investing.

Opinions?

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posted: Apr. 28, 2008 @ 7:10a

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marketingmike
Cranky Member

posted: Apr. 28, 2008 @ 7:21a

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Based on the scant facts you've provided, seems like a reasonable option.

LH2004
Frivolous Member

posted: Apr. 28, 2008 @ 7:22a

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Unless you have some medical condition that is greatly shortening your life expectancy, do it immediately.

javun2016
New Member

posted: Apr. 28, 2008 @ 12:39p

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I agree. http://www.daveramsey.com/the_truth_about/life_insurance_3481.html.cfm

psychtobe
Senior Member - 2K

posted: Apr. 28, 2008 @ 1:18p

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I would not do this until you've sent your policy to The Consumer Federation of America. For around $50, they will analyze the policy and determine whether at this point, having paid into it for X number of years, it is worth holding on to.

You said you do not have dependents. Will you? If you are engaged and plan to have children in the next 5 years, that could influence your plans. Do you smoke, or have a medical condition which would affect your insurability? Then consider holding on to your plan, pending the above analysis.

On the other hand, if you have no plans to have kids and are healthy and likely to remain so, then even if the whole life policy is 'worth' holding on to, it may not be worth it for you.

DMDiller
Member

posted: Apr. 28, 2008 @ 1:28p

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psychtobe said:I would not do this until you've sent your policy to The Consumer Federation of America. For around $50, they will analyze the policy and determine whether at this point, having paid into it for X number of years, it is worth holding on to.

You said you do not have dependents. Will you? If you are engaged and plan to have children in the next 5 years, that could influence your plans. Do you smoke, or have a medical condition which would affect your insurability? Then consider holding on to your plan, pending the above analysis.

On the other hand, if you have no plans to have kids and are healthy and likely to remain so, then even if the whole life policy is 'worth' holding on to, it may not be worth it for you.

No children, no plans of children, no girlfriend, no plans of engagement, etc etc. I'm very healthy and have no medical conditions that would affect my insurability later in life. Just doesn't seem like I need it. If I die from some freak accident, I have nobody to worry about and no expenses to worry about for the most part (funeral).

psychtobe
Senior Member - 2K

posted: Apr. 28, 2008 @ 2:33p

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DMDiller said:psychtobe said:I would not do this until you've sent your policy to The Consumer Federation of America. For around $50, they will analyze the policy and determine whether at this point, having paid into it for X number of years, it is worth holding on to.

You said you do not have dependents. Will you? If you are engaged and plan to have children in the next 5 years, that could influence your plans. Do you smoke, or have a medical condition which would affect your insurability? Then consider holding on to your plan, pending the above analysis.

On the other hand, if you have no plans to have kids and are healthy and likely to remain so, then even if the whole life policy is 'worth' holding on to, it may not be worth it for you.

No children, no plans of children, no girlfriend, no plans of engagement, etc etc. I'm very healthy and have no medical conditions that would affect my insurability later in life. Just doesn't seem like I need it. If I die from some freak accident, I have nobody to worry about and no expenses to worry about for the most part (funeral).

In that case, it doesn't sound like life insurance at any price is worth your while, and the decision you've outlined makes sense. If there is A PRICE at which you would pay for insurance, then consider the analysis I described; otherwise, dump it.