AboutJosh Elliott Expertise Annuities and life insurance only please.
Experience I am the owner of Annuity Experts, Inc., a California insurance agency that specializes in the annuity and insurance marketplace. I have authored a number of online publications that have been distributed to over 10,000 individuals over the past 4 years. I am also a financial planner and registered investment advisor with experience in the financial sector for over 10 years.
Education/Credentials Bachelors of Science from the University of Southern California.
Question My husband is changing jobs where he has a whole life insurance policy that he has paid into for 18 years( company paid 60% of premium). Cash value is 152k, they are saying we would get 115k that will be taxed so we would get about 75k? From what I understand term is a better deal and we are thinking of moving forward with cashing this out and moving to term for him. Is this a good idea? Or we can negotiate with the insurance( NW mutual) to maintain the policy for him. If we keep it will the fees continue to be so huge? ( Where is our 35k going?) Thank you!
Answer Hello Amanda,
Thank you for your question. Without knowing the exact specifications of the policy, it is somewhat difficult to analyze, but in general, I can recommend the following:
1. If cash value is $152k, why will you only receive $115k? You need to find out what the "surrender value" is, and then develop a plan accordingly.
2. If you do cash out the policy, then you will have to pay tax depending on how the premiums were paid (pre-tax or after-tax) and the growth/interest in addition to the premiums paid.
3. Term life insurance is a fantastic way to protect for short "term" needs (typically 10-30 years), and it is the MOST affordable option.
4. You can transfer or exchange part of your current life insurance value to a new term policy tax free, which is an option you should explore.
5. You can also transfer or exchange the remainder of your policy to a different life insurance policy or an annuity TAX FREE. That is, the transfer is TAX FREE, but there still may be some taxes for future withdrawals, etc.
You decision should be based on your needs: do you NEED life insurance? do you NEED the money for retirement? do you NEED the money now or later?
After asking yourself those questions, you can make some decisions with the help of a financial professional that fits your situation.
If I can be of any personal assistance, please feel free to contact me directly at djelliott@newportadvisory.com or call me in Southern California at 661-296-8080. I would be happy to give you a more complete analysis and some recommendations to fit your needs.
