I’m a 23F with a whole life policy from Globe Life. My mom set it up for me when I was a baby, but now I’m thinking of cashing it out and switching to term life insurance (still not sure which company). My mom is really against me doing this and keeps asking me not to.
I also started a whole life policy for my 9-month-old daughter. Combined, both policies cost about $300 a year. Mine is for $35,000 and hers is for $45,000.
I’m really confused about what to do next.
Why do you want to cash out the whole life policy? You can always keep it and just add a term policy.
Madden said:
Why do you want to cash out the whole life policy? You can always keep it and just add a term policy.
This seems like the best advice.
Madden said:
Why do you want to cash out the whole life policy? You can always keep it and just add a term policy.
I thought if I cashed it out, I’d cancel the policy and use that money to get term life insurance.
@Ren
As a healthy 23-year-old, the cost of a term policy would probably be about the price of a cup of coffee a week.
Madden said:
@Ren
As a healthy 23-year-old, the cost of a term policy would probably be about the price of a cup of coffee a week.
You can also have Globe Life use the dividends from your policy to cover the premiums, so you don’t have to keep paying out of pocket.
@Madden
This is a good option and would let you keep the death benefit as a final expense policy without much extra cost.
You’ve had the policy for 23 years now. By this point, the cash value is likely more than what you’ve paid in premiums, and it’s growing faster each year. Cashing it out now wouldn’t be the smartest move. Keep paying the premiums and, if needed, you can always borrow against the policy to access the cash value.
Your mom is right on this one.
@Shane
So, I could take a loan against the policy and still keep the whole life insurance?
Ren said:
@Shane
So, I could take a loan against the policy and still keep the whole life insurance?
Yes, exactly. You’d still keep the policy active.
Ren said:
@Shane
So, I could take a loan against the policy and still keep the whole life insurance?
Yes, exactly. You’d still keep the policy active.
Just be careful with policy loans. If you don’t pay them back, the interest keeps adding up. And if the policy runs out of cash value, you might end up with a tax bill.
@Morgan
That’s true, but if you use the loan responsibly, it’s the best way to access the cash value without paying taxes on it. Plus, your policy still earns interest on the full amount, even with the loan.
@Shane
It’s definitely a good option if you plan to pay it back. Just be mindful of the risks if you don’t.
Ren said:
@Shane
So, I could take a loan against the policy and still keep the whole life insurance?
Just remember, the payout will be the face value ($35,000) minus whatever you owe on the loan if you don’t pay it back.
Ren said:
@Shane
So, I could take a loan against the policy and still keep the whole life insurance?
Also, make sure a long-term loan doesn’t cause the policy to lapse.
If your mom doesn’t want you to get rid of the policy, maybe she could help you pay the premium. That policy has been around for 22 years, so think about the cash value vs. the death benefits. You can always add a term policy to cover additional needs.
Whole life premiums stay the same forever, but term premiums go up after 10, 20, or 30 years depending on what you choose. By then, you’ll be older, and term life will cost more.
@Kasey
Yep, the biggest advantage of whole life is that you lock in the premium, so it never changes.
I’d say keep the policy. You’ve already paid into it for this long.
You could lower your death benefit to $30k or even $25k to reduce the premium cost.
Globe Life’s whole life policies only cover you until around 80-85 (they’re not very clear on it). That could be an issue. You might want to consider another company or keep both policies active since you could outlive this one.