It barely costs anything. It’s important that you don’t drop your life insurance before you have carefully reviewed your finances, says life insurance provider Matt Schmidt. We don’t know if it will be long and drawn out, short and quick, expensive or cheap. Can I Cash In A Whole Life Insurance Policy? Her goal is to make financial topics interesting (because they often aren't) and she believes that a healthy dose of sarcasm never hurt anyone. However, the prospective return characteristics of life insurance policies are different when accounting for the death benefit. If the term is met and the rates increased drastically you may want to drop it and apply for another policy if your health is still good. Buy life insurance only if someone you love will suffer financially by your death. Though the latter can be a reasonable choice for some people, for most, signing up for whole life insurance is a move you're more likely to regret. And while tapping retirement funds early to cover other financial needs generally isn't an ideal choice, you do have some flexibility when it comes to those accounts. Maybe you bought a policy that is too expensive now, or maybe you’ve decided that it makes more sense to keep your retirement investments separate from your life insurance and you want to switch over to a lower … For example, if you purchased the plan to cover a 30 year mortgage and paid it off early and have no further need for the protection you should drop it. This is important. Don’t be so excited to get rid of life insurance that you ignore some level of need you may still have. Now, we are at the point where we could drop the life insurance and reduce the disability. One nice feature about life insurance loans is that you do not need to pay them back. Whole life dividends are therefore considered a tax-free return of premium up to the extent of … When you were younger, with a growing family, you didn’t have the assets you do now. Rather than canceling your whole lie insurance policy if the going gets tough, you have several options to reduce payments or stop paying altogether, and still keep everything you love. If your policy is still in the allowable conversion period, you’ll be able to simply switch a portion of your coverage to a permanent plan without the need for medically re-qualifying. Whole life insurance accumulates cash value. If you turn around and invest that sum steadily in stocks, you should have little trouble generating an average annual 7% return -- that's actually a few percentage points below the stock market's average. Dear Pete: I’m 57 years old, my kids are grown and out of the house, and I don’t really feel like I need all the life insurance I once carried. Learn the difference and which may be best for you. While insurers generally sell them together, and drivers of older cars often drop them at the same time, Poe and Worters … You'll often hear that if you have people in your life who depend on you financially, or who stand to suffer financially in the event of your untimely passing, then having a life insurance policy is a must. Let's start by laying out the key differences between a term life and a whole life policy. Keep that up, and you'll have just over $236,000 in 30 years. However, the disability insurance is a sizable investment each year. Whole life insurance, on the other hand, covers you indefinitely, provided you keep paying your premiums. If you retire and don’t have issues paying bills or making ends meet you likely don’t need life insurance. As such, there's little sense in locking your money away in a whole life policy when term life insurance offers you much more financial leeway. 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