Seeking Advice: Should I Adjust Dividends, cancel Whole Life Insurance Policy, or keep it?
Hi,
I recently discovered that my parents took out whole life insurance policies for themselves, me, and my siblings—five policies in total—many years ago. After researching, I understand that whole life insurance is generally considered less advantageous compared to other investment options like the stock market. I consider myself financially literate and familiar with various financial products.
Here’s the information for my whole life insurance policy:
Creation Date: 2011
Annual Premium: ~$2,000
Total Premiums Paid: ~$28,000
Total Dividends Paid Out: ~$4,000 (reinvested into paid-up additions, resulting in an Additional Insurance (AI) balance of around $30,000)
Death Benefit: $500,000+
Loan Principal: ~$10,000 (taken out by my parents, with a 5.5% interest rate compounded daily)
Base Cash Value: ~$20,000
Net Cash Value if Surrendered: ~$14,000
Given this information, I have two questions:
Should we switch the dividends to pay down the loan amount instead of reinvesting in paid-up additions (PUA)?
Should we consider surrendering or canceling the policy?
