Should I close my FIL's Flexible Premium Variable Life Insurance Policy?

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seatownflyer
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Joined: Thu Oct 08, 2015 6:00 pm

Should I close my FIL's Flexible Premium Variable Life Insurance Policy?

Post by seatownflyer » Sun Feb 10, 2019 4:54 pm

My father in law recently retired from his small business at age 70. In 2001 he unfortunately purchased a flexible premium variable life insurance policy ($500k policy) from then GE Life and Annuity Assurance Company (Now Genworth Financial) and has been paying $500/month. The current value of the investment account is about $80k. I believe the surrender value is now $0 (expired at 180 months).

Since he no longer has a steady source of income, he wants to stop paying the $500/month. I've been reading through his policy and it seems like he has a few options:

1) Keep paying the $500/month (I'm assuming the insurance premium will keep going up and very little actually gets contributed to the investment portion now?)

2) Use the investment portion of his account to pay the insurance premiums? I can't tell from reading through his policy, but if he used the investment account to pay the insurance premium, would the death benefit be reduced?

3) Cash out and terminate the life insurance. Is it possible to withdraw let's say 50% (not a loan but a cash out?)?

At this point, I don't have much more information. Do you guys have any feedback on on the options? It seems like he is interested in using some or all of the investment account to use as income during retirement.

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David Jay
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Location: Michigan

Re: Should I close my FIL's Flexible Premium Variable Life Insurance Policy?

Post by David Jay » Sun Feb 10, 2019 5:07 pm

The insurance portion is going to keep going up as he ages. He needs to get out of it before the insurance portion eats him alive.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Stinky
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Location: Sweet Home Alabama

Re: Should I close my FIL's Flexible Premium Variable Life Insurance Policy?

Post by Stinky » Sun Feb 10, 2019 5:32 pm

Does he need life insurance at age 70? Probably not.

Surrender the policy. Save the monthly premium and invest the surrender value.
It's a GREAT day to be alive - Travis Tritt

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