65 Life Policy With Large Loan – What Are My Best Options?

I have a life insurance question. Many years ago, a friend of my father’s sold me a “65 Life” policy from a company that I will call “NW”. It was clearly explained that once the dividend exceeded the annual payment, then the dividend would be directed to the annual payment vs. purchasing additional insurance. Unfortunately, this did not occur and at some point that NW can’t or won’t identify, the policy was “switched” so that the dividend was used to purchase additional insurance and I now have a significant debt on the policy. I requested that the change be investigated and documented, but NW will only respond that they don’t keep records that long. I also asked for a copy of my original policy application, but same response. The interest rate for many years was 8%, although I was finally told that I could drop it to 5% so the last year it was 5.73% (not sure yet why it was more than 5%) and this year I switched the dividend to pay the premium, but it only covered about 2/3 of the annual premium of over $2K. Note sure how the premium can go up again, it was supposed to be a “fixed payment” policy. The loan value is now $120K, the net accumulated value $240K, the next accumulated value is $120k, the net death benefit is about $320K after the loan, the cost basis is $65K, and the taxable gain if surrendered is about $180K. Ideally, I would like to cancel the policy and buy a term policy (from another company), but I am concerned about the tax consequences. Note that the NW rep group that I am assigned to has been useless, can’t even get a call back after writing the senior person more than once and being assured that someone would get back to me. I would really appreciate recommendations on what I should do. (I now know about the downside of whole life policies, which is well covered in this article: https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance.)

submitted by /u/Beneficial-Spell5739
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