This wasn't my thread, but the conclusion was to cash out. My math came out differently and I have been holding on.viewtopic.php?f=1&t=99669
Let me start at the beginning. About 25 years ago, I (actually parents) was sold a $100,000 whole life insurance policy, where the cash value the first 5-10 years was basically non-existent. Water under the bridge. Noticed that cash values started growing after that, and by my simple math were running about 5-6% after I backed out premiums, so I started treating this as a fixed income investment. This year, here are the numbers from the latest annual statement:
Annual Premium: $600
Current Death Benefit: $125,000 (due to PUA rider)
Cash value: $17,000
Current Surrender Value: $22,500
Current Dividend: $350
I don't have immediate access to the original tables, but will try to track them down. My understanding is that if I cashed out last year, I would have gotten $17,000 (minus some cash out fees). Cashing out today would yield $22,500 (less fees). If I back out the premium, I got about 28% return this year, is that correct way to think about it? (that's how I've been getting 6% before) ((5500-600)/17000 or (5500-600)/(17000+600))
If this return calculation is in the ballpark, what happened last year to account for the large gain? Is this typical of a period during the life insurance policy where there are large gains? If so, when do they slow? Does it reach a point where I should just cash out? Please comment on exit strategy for this policy, or keep it till the end?
Returns in the 6% are indifferent to me - could just toss the CV into a bond fund as alternative. So far, 1) keeping life insurance because returns appear decent (really good this year), 2) not even considering COI which is a freebie right now, 3) learn more about whole life and other insurance (but would not do it over if starting out again or recommend most insurance products most of the time).
(Just learning about participating vs non-participating, but I'm guessing it's participating)