Seeking Advice | Whole Life Surrender and Purchase Term
Thank you in advance for any and all advice / thoughts on this situation. I'll preface by stating that this is in no way "attention seeking" for any reason, my understanding of life insurance is greater than most "non-agents" and an attempt to cover all basics / pertinent specifics of the policies will be made throughout the post.
In 2013, the ripe age of 26 (myself) and 23 (wife), my wife and I purchased whole life insurance; it was the best decision at the time without knowing what the future would like look (family / career) and knowing that we didn't want insurance to be a "gamble or investment" – cash balance was a plus, but not really relevant. Ultimately, two Elite Non-Smoker, dividend paying, Whole Life 120 policies through MetLife were purchased in the amount of $500,000 / each.
Currently, the first policy has an annual premium of $3,555 – a death benefit of $502,963.00, net surrender of $36,105.00, cost basis of $42,632.00, guaranteed paid-up of $165,888.00 and Extended Term Insurance for 29 years 30 days.
The second policy has an annual premium of $2785 – a death benefit of $505,847.00, net surrender of $28,180.00, cost basis of $33,307.00, guaranteed paid-up of $158,888.00 and Extended Term Insurance for 32 years 201 days.
Results after shopping around for Term Insurance the last few months:
Myself – Preferred Rate
20-year, $500,000 term policy with Midland – $365.00/annual
30-year, $500,000 term policy with Midland – $590.00/annual
Spouse – Standard, Non-Tobacco
20-year, $500,000 term policy with Midland – $645.00/annual
30-year, $500,000 term policy with Midland – $1075.00/annual
Situation:
Fast forward to 2024, my wife and I are grateful to have four (4) beautiful and healthy children that each have their own Whole Life (Paid up in 10 year), $100,000 policies thru MetLife, Minnesota Life and Cincinnati Life. One (1) of the policies is paid-up and the other three (3) are still in payment mode. Several months ago, I started thinking about the need of my wife' and I whole life insurance at this stage in our lives. Long having known the impacts that a "go-term, invest the rest" mentality came and gone, its never been a regret. I also have a small life insurance policy thru my employer of fourteen (14) years equal to one year salary, a pension, 401(k) and 529 plans for each child. After looking at the financial landscape and understanding all information at hand, the "selfish" me arose and started thinking how "nice" it would be to surrender both policies – pay off all debt aside from the mortgage (~158K) left; with a total yearly income of ~150K – doubling down on mortgage payments at 3% interest and easing the stress on our lives. A side note that my wife is self-employed and I have a career in IT.
As mentioned in the previous paragraph, knowing that my kids are well-taken care of and my wife covered until age 64 (if term were locked in today (at .5 or 1 million) and all the aforementioned benefits excluding any 529 plan, but would "potentially" include social security; is this the time to be "selfish" and relieve stress, take care of the debt and build a nice emergency savings OR continue the only way that is known?
Realistically, I am very fortunate to have mostly been in a place throughout my life to provide for my family, have a stable career, have the necessities in life AND able to give back to others and be involved in non-profits. Albeit having money to purchase nice things, it cant buy true happiness in the long run. I've never been one to put my personal information out for others to observe, but feel like this is one of the last remaining major obstacles with profound impact in my lifetime that needs to be made and really want to gather others thoughts on how to proceed moving forward and what makes the most sense.
Again, thank you in advance.
Respectfully!
submitted by /u/Xcalibur1523
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