Insurance experts????

[iadis58]

My daughter has a whole life insurance policy that was bought for her when she was born in 1993 by her grand parents. She is now in college and could use the money at some point to pay off some of college tuition. That was the reason they bought the policy in the first place. I know (Dave Ramsey followers) that this was not the best way of investing their money. Would you cash it out at this point and put it in something a little more secure since she will need it short term, like the next two years. I worry the stock market is about to tank again at any time or what happens if Prudential takes a big hit or both. My question is figuring what the heck its cash value is. According to her last statement, she has a death benefit of (using round numbers) 27000, paid up addition life insurance of 15000, guaranteed cash value 1500 and net guaranteed cash value of 2300. I am assuming she would get about 2300 if she cashes this out. Can any experts out there explain the terminology? I apologize I do not have her statement in front of me but I think it is close to the terms they used. Any advice? Thoughts? Suggestions? Thank you

 

[janey99]

When you say cash out and put it "somewhere more secure" do you mean you're afraid Pru is going to go under, so you want to pick somewhere yourself (like some type of savings account or investment vehicle) and put the money there?

I don't think you need to worry about Pru going under. I would leave the money where it is.

Jane

 

[mjkacmom]

My parents just gave me some, and the cash value was $8000, so we cashed it, and put in one of our mutual funds accounts. Granted, we don't need the money now. We have term life insurance, so whole life was not a good investment (never is). However, if you need the money soon, just leave it - it's safe.

Fortunately, my parents are much more money smart now! They were young when they had me.

 

[angwill]

IMO, I would leave the life insurance policy in place unless you have plenty of money stashed away just in case something happens to your daughter for funeral costs.

My aunt let her son cash his out for a car thinking he is working and would have benefits from his job if something happened. Sadly a few years later he passed away and didn't have a job with benefits so she had to take out a loan to pay for his funeral.

 

[ceecee]

My mom got me a whole life with Pridential when I was a child. I borrowed on it when I got married, but still have the policy. I know they say it's a bad investment, but what I pay for term a year is really high and I'm not unhealthy, overweight, smoker, etc.! The whole policy was paid for in 10 years and it was very inexpensive, of course it was only 20K.

 

[angwill]

My mom got me a whole life with Pridential when I was a child. I borrowed on it when I got married, but still have the policy. I know they say it's a bad investment, but what I pay for term a year is really high and I'm not unhealthy, overweight, smoker, etc.! The whole policy was paid for in 10 years and it was very inexpensive, of course it was only 20K.

Call Prudential and see if you can add to the amount of the 20K policy. One of the reasons they give to buy those whole life 20K policies it because the insured can always add to it and never be turned down for pre exhisting conditions. It might be worth a call if it is less than you are paying for term now.

 

[clh2]

My parents had a whole life policy on me when I was little, and they gave me the option to "continue" the plan after I was out of college, or to cash it out.

I cashed it out, and used the money to get the driveway on the house I had just purchased paved.

Just an FYI - taxes will be owed on the proceeds, so you may want to keep that in mind when "cashing" this out.