Sun Jul 17, 2022, 08:56 AM

Whole life policies cash out?

So, here's the situation:

We've got a total of five whole life policies, only two of which we are paying premiums on. They all have investment components, but not generating a lot of interest.

Our financial situation with other investments means that life insurance, at this point, just doesn't make sense.

Our financial advisor, who sold us the policies years ago, is saying, 'Oh, no. You don't want to cash them in. What if one of you dies and you need the money?' The thing is, if one of us dies, the other actually won't need the money.

BTW - we're in France, and covered by the French health system, so we can take that out of the equation.

Thanks for any thoughts!

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13 replies	Author	Time	Post
Whole life policies cash out? (Original post)	GoneOffShore	Jul 2022	OP
You might want to get a new financial advisor.	Tomconroy	Jul 2022	#1
I'm actually pretty happy with the other instruments he has us in.	GoneOffShore	Jul 2022	#4
I did that but for different reasons	PJMcK	Jul 2022	#2
I am most likely going to cash them out. I wanted the 'hive mind' help of others who have done this.	GoneOffShore	Jul 2022	#7
If you don't need the protection of insurance, I'd say cash them in	bcool	Jul 2022	#3
Insurance is like the casinos.	multigraincracker	Jul 2022	#5
That's a thing that I actually knew, but kind of forgot about. Thanks for the reminder!	GoneOffShore	Jul 2022	#8
If the survivor doesn't need the money, I'd dump the policies. The advisor is thinking of...	TreasonousBastard	Jul 2022	#6
Old school answers to new situations. I like it.	GoneOffShore	Jul 2022	#9
Not at all familiar with French tax law, or even us tax law	bottomofthehill	Jul 2022	#10
Policies are held in the US. No kids. Two are on me, three on Mrs GoS.	GoneOffShore	Jul 2022	#11
I'd say definitely cash them in.	PoindexterOglethorpe	Aug 2022	#12
Thank you. I have already cashed one in, and am waiting until the new year for the others.	GoneOffShore	Aug 2022	#13

Response to GoneOffShore (Original post)

Sun Jul 17, 2022, 09:06 AM

Tomconroy (6,683 posts)

1. You might want to get a new financial advisor.

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Response to Tomconroy (Reply #1)

Sun Jul 17, 2022, 09:10 AM

GoneOffShore (16,909 posts)

4. I'm actually pretty happy with the other instruments he has us in.

I think he may be a bit one sided on life insurance.

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Response to GoneOffShore (Original post)

Sun Jul 17, 2022, 09:09 AM

PJMcK (20,230 posts)

2. I did that but for different reasons

When I got divorced, we liquidated the "universal" policies I had set up, (they were essentially "whole life" policies each with an investment component).

It was a good decision. Good luck with your choices.

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Response to PJMcK (Reply #2)

Sun Jul 17, 2022, 09:27 AM

GoneOffShore (16,909 posts)

7. I am most likely going to cash them out. I wanted the 'hive mind' help of others who have done this.

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Response to GoneOffShore (Original post)

Sun Jul 17, 2022, 09:09 AM

bcool (197 posts)

3. If you don't need the protection of insurance, I'd say cash them in

The purpose of life insurance is to provide some measure of financial protection to the beneficiary if the insured dies. You're paying for that protection, so if you don't need it I'd cash in the policies and invest the proceeds plus the recurring premiums you're still paying on them.

And, if that's truly what your financial advisor told you I'd think about getting another one. Sounds like they're parroting what they learned in financial advisor school - and not analyzing your situation to determine what's best for you.

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Response to GoneOffShore (Original post)

Sun Jul 17, 2022, 09:15 AM

multigraincracker (30,317 posts)

5. Insurance is like the casinos.

They know the odds and always win in the long run. Ok to bet a little once in a while, but nothing wrong with cashing in your winnings now.

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Response to multigraincracker (Reply #5)

Sun Jul 17, 2022, 09:28 AM

GoneOffShore (16,909 posts)

8. That's a thing that I actually knew, but kind of forgot about. Thanks for the reminder!

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Response to GoneOffShore (Original post)

Sun Jul 17, 2022, 09:24 AM

TreasonousBastard (42,424 posts)

6. If the survivor doesn't need the money, I'd dump the policies. The advisor is thinking of...

old-school answers to new situations, and is probably getting a commission from the underwriters.

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Response to TreasonousBastard (Reply #6)

Sun Jul 17, 2022, 09:29 AM

GoneOffShore (16,909 posts)

9. Old school answers to new situations. I like it.

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Response to GoneOffShore (Original post)

Sun Jul 17, 2022, 10:15 AM

bottomofthehill (7,473 posts)

10. Not at all familiar with French tax law, or even us tax law

But one of the reasons your financial advisor may think you should hold is that life insurance payment on death is not taxable in the US. Cashing the policy's in MAY be taxable. Also are the policies all on you? You and spouse individually, second to die policies? Also are you trying to leave money to anyone else like children or family. There are a lot of good reasons to leave them if you do not need the money to live at this point.

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Response to bottomofthehill (Reply #10)

Sun Jul 17, 2022, 12:20 PM

GoneOffShore (16,909 posts)