What to do with a whole life insurance policy
My parents bought this for me many years ago. I'm in the process of transferring ownership to me. The cash value currently is around 24K. The death benefit is only 100,000. I know I can borrow against the cash value, but I want to wait until I have more cash in the bank to get into syndications (which usually requires at least 50K).
What can I do in the meantime with this policy?
Also, is there a way to increase the death benefit?
Everything depends on how the policy is set up and the rest of your financial picture.
It could make sense to pay as much premium as you can to build the cash value.
I would get in touch with an agent to discuss your options.
@John Perrings - Thanks. I'll have to have a conversation with the agent on what I can do right now.
In regards to building cash value, the death benefit would stay same regardless of cash value in the policy, correct? So for someone that does not intend/doesn't know how to take advantage of the living benefit, the minimum premium required for the policy is enough, right?
Quote fro:
- Thanks. I'll have to have a conversation with the agent on what I can do right now.
In regards to building cash value, the death benefit would stay same regardless of cash value in the policy, correct? So for someone that does not intend/doesn't know how to take advantage of the living benefit, the minimum premium required for the policy is enough, right?
It really depends on the policy. Oftentimes, premium payments will increase both cash value and death benefit.
I’m not following your second question. If premium payments increase your cash value, I’d want to pay as much in premium as I could. :)
@John Perrings Ok. I'll need to ask how to increase the death benefit.
For the second question, it was based on the death benefit being locked at a certain amount and if the person doesn't do anything with the cash value.
If the policy is a whole life policy there is a direct connection between the cash value and death benefit. The only way to increase death benefit is if the policy allows additional paid up premium.
if it does, you’re likely not going to be able to get the same underwriting (since you were younger and healthier as a kid).
It’s a good time to re-evaluate the performance of that policy and see if the cash value is better off rolled into a new policy like an IUL or if you can add additional value to this one.
Many times those policies didn’t pay dividends. If the policy doesn’t pay dividends, I’d roll the cash value into a better served rolled if you’re still healthy because it will grow faster. If it pays dividends then … again, you just have to review the details.
When looking for an agent look for someone who specializes in max funding life insurance. Many believe they are, but few really know what they’re doing.
Quote from @Chris Yeung:
@John Perrings Ok. I'll need to ask how to increase the death benefit.
For the second question, it was based on the death benefit being locked at a certain amount and if the person doesn't do anything with the cash value.
Taking policy loans and investing is essentially what infinite banking is.
I load up quite a bit and take the loan right after to invest.
I do the same thing. I use it for BRRRR investing and Luxury Airbnbs