Whole Life Insurance Mistake- help

Submitted by Pacman91390 t3_126y4o3 in personalfinance

I’m ashamed to say I got “help” from a “financial advisor” who I somehow let convince me that a whole life insurance policy (with a $12,000 annual premium) was a good idea in addition to my term policy. I recently parted ways with said “financial advisor” after I realized how bad these policies actually are and am now planning to discontinue my policy. I paid the yearly premium up front so unfortunately, the policy is mine until September when I can cancel it and use the cash out option. It looks like it will only pay out approximately $2,000 which means a hefty loss of approx. $10,000 (it’s about an ~$800 cash out right now.)

Is there a better way to change this policy so I don’t take such a huge hit financially? I considered reducing the premium and just keeping it but I really don’t want to pay for this extra policy when I could be using it elsewhere (student loan payments, mortgage, index funds, etc.)

I know there are some other ways to use this money in these kind of policies so I’m hoping someone can steer me back in the right direction!

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Mr_Zamboni_Man t1_jebj0ww wrote

Maybe you can cancel the policy and refund the remainder of the premium?

Also, never, ever ever pay upfront what you can pay later at no cost to you.

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Pacman91390 OP t1_jebk6to wrote

I asked, they won’t refund the remainder. I am now learning this and will never let myself make a mistake like this again. Will also be spending a good amount of time teaching myself more in depth about financials because I now trust no one.

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Mr_Zamboni_Man t1_jebmtwn wrote

In that case your only recourse as far as I can see is if that is not a legally defensible way to structure the contract. You’d need to do some legal research or talk to a lawyer.

As far as finances, I’d someone is ever trying to convince you of something, it should raise your alarm bells immediately. Investing is actually in general very simple: put your money in to index funds unless you really know what you are doing.

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Admirable_Nothing t1_jebnz7m wrote

Take a look at your illustration and take a look at the surrender values in the coming years. Does it make sense to keep paying the $12k to get at the higher surrender values down the road? I think not as over 100% of the first year's premium is paid to loads and underwriting costs. Sometime paying a few years more if you are ten or more years into the product would make a few more premiums worthwhile but not in the early years of the contracts.

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Linny911 t1_jebom4o wrote

Most important questions are, who is the insurer and is it a policy where you pay forever or only a specified amount of years (ie: 10 years).

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Coronator t1_jegvfet wrote

Why did you get the policy to begin with? What made you first think it was a good plan for you, and what made you now think it’s not?

I don’t know anything about your financial situation or if it’s a good plan for you or not, but that’s a pretty drastic 180. Whole life insurance definitely requires a commitment to make it work at all.

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