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Should we surrender/cash out H's life insurance?
DH's parents bought an adjustable whole life insurance policy on him when he was 3. We both work and don't have kids, so right now he doesn't need life insurance (and hasn't for the last 22 years...). If I could go back in time, I'd tell FIL not to buy the policy, but alas, here we are. The semi-annual premium is due soon, so we're trying to decide if it would be smartest to cash out on the policy.
As I see it, we have a few options: A) cash out and invest the value for retirement now (if I can convince him that he shouldn't spend a couple hundred of it...), then buy term life later; 
keep the policy and buy term life to supplement it once we have kids; or C) keep it for now and cash out/invest in a few years to switch completely to term life, assuming he doesn't get cancer or anything (this is the only benefit I've been able to find for whole life - it's guaranteed, while he may become uninsurable or extremely expensive to insure between now and when we decide it's time to buy term life. Of course, then he still doesn't have enough coverage for dependents, so this is probably dumb).
We'll probably go with A, but I'm looking for opinions to be sure I'm not missing something. Here are the policy details:
Death benefit: $75,000, (+$40,000 for accidental death) - not nearly enough once he has dependents...
Semi-annual premium: $254
Guaranteed purchase option in 2015: premium goes up (probably to $700/yr or so) for another $25k in death benefits
Cash value (after $100 surrender charge): $1,134
It looks like it's accumulating a cash value of about $300/year, so we're basically "losing" $200/year on insuring him. He claims that the cash value is close to what he has paid into the policy, though I think he's probably paid in more like $1500. In any case, we would lose a relatively small amount of money that he paid into it if we cashed it out. I'm also not sure how much we would owe in taxes for the cashout, but investing, say, 1k plus the premiums we'd save over the next few years would likely mean at least another $50-60k in a Roth IRA by the time we retire.
So... WWMMD? Am I missing anything in my reasoning?
Re: Should we surrender/cash out H's life insurance?
BFP 11.8.12 * EDD 7.17.13 * MC 12.20.12
Whiskey Tango Foxtrot, over!
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. SeussThis isn't really advice, but more stuff to think about and check into.
You say there's a $1,134 CV, but it's accumulating at $300 per year. That only makes sense if it's starting to accumulate at a higher rate. You might want to find out the a
And if I were to offer general advice. I would say to drop this and get term for what you think you might need. You mentioned that if you guys die then you have ways to manage. Therefor you probably don't even need any life insurance right now.
<Also, keep in mind that the benefit to buying life insurance at a younger age rather than waiting is that your rates are lower - you enter the program paying less than if you wait 5-10 years and then bough tin.
Also, your health is good now. But
Personally, I would keep it. But that is because I am an exception to the rule, and think worst case scenario every single time.
You feel that you would be okay now if something were to happen to your H, but that could drastically change in
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
She doesn't need life insurance for the event you just described. She needs health insurance with a max out of pocket limit.
Why are you paying $1200 a year for $100K DB. $100K is squat. I can get a Term life Insurance policy with a $100K DB fo
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
Life insurance on a child is one of the stupidest investments ever. It's a rip off.
$300 / year for a $75,000 death benefit seems like further proof that this is a really bad policy. Similarly, I think you can do better than $700 p
Thanks for your input, everyone! It's helpful to read different points of view.
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. Seuss
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. SeussI have a universal life policy worth $64,000 that my mom took out when I was 12. The premiums are $168/year. Once I was on my own, I took over paying the premiums. I pretty much view it as a savings account. The interest ra
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TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com
TTC since 1/13 DX:PCOS 5/13 (long, anovulatory cycles)
Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
1/14 PCOS / Gluten Free Diet to hopefully regulate my system.
Chemical Pregnancy 03/14
Surprise BFP 6/14, Beta #1: 126 Beta #2: 340 Stick baby, stick! EDD 2/17/15
Riley Elaine born 2/16/15
TTC 2.0 6/15
Chemical Pregnancy 9/15
Chemical Pregnancy 6/16
BFP 9/16 EDD 6/3/17
Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
www.5yearstonever.blogspot.com