Cashing Matured Whole Life Policy, on Grown Son
- Thread starter no34evr
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So what you're saying is you want to surrender the policy, pay taxes, put it in a CD, lose value to inflation, and then pay taxes again on the capital gains when you withdraw it?
Have you spoken with your insurance agent?
You have a lot of options but CDs or "cashing it in" would likely create a tax liability (as another poster mentioned).
If you really don't want the insurance, you could do a 1035 exchange into a fixed annuity (which would probably have a better rate than a CD) without being subject to any taxes.
There is really no way, however, to give a recommendation without your goals and policy specifics.
I can refer you to someone if you like.
- 11,274
Why not transfer the policy to your son?
- 477
There are no capital gains on CD's. They will get a 1099 on interest earned each year.
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Do you still own the policy?
Transfer ownership to your son. That policy is likely one of the most productive tools for year over year growth that you or he own - especially if its a dividend paying policy. Look at the annual premium owed vs the annual gain. My wife has one since she was 6... premium is $60/yr, growth is over 4x that - just for paying the premium. Surrendering or 1035ing the policy would likely be the WORST thing you could do with that policy.
If the policy happens to be paid up, that is great too. You get continued growth annually with zero premium due.
If the policy happens to be paid up, that is great too. You get continued growth annually with zero premium due.
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I guess I need to call them, honestly if I give it to him HE will cash it in. If I thought he'd keep it as an investment I'd give it to him. He doesn't even have a decent 401k. For some reason, to me, that age group do not view retirement planning the same way as mine did. He says you can plan other ways, I just don't know what they are! I started at 18. My daddy taught me well. I retired at 50. I will speak to my financial guy but I was up late thought about this and started looking around. Tkx for your help. No34evr
If he will cash it in, YOU KEEP IT. It will do nothing but get better over time.
At least you know he will have death benefit to cover expenses at some point - whether he needs it or not.
You said you will talk to your financial guy, that is good. If he says cash it in...I'd be real cautious of that advice.
- 11,274
"Cashing it in" could be done in different ways. Taking out a loan against the policy can be a great idea. As long as he pays the annual interest due each year, it will restore the earnings promised by the policy. Lots of other benefits too, but, as you said, only as long as he keeps it.
He would have to be educated by an agent that knows how.
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Yeah, I hear ya, it's called the entitlement generation. Looking back I wasn't taught except to save in a savings account. Of course you actually could make $ in a savings account back then when they had something called interest!
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