Whole life policies cash out?

[GoneOffShore]

So, here's the situation:

We've got a total of five whole life policies, only two of which we are paying premiums on. They all have investment components, but not generating a lot of interest.

Our financial situation with other investments means that life insurance, at this point, just doesn't make sense.

Our financial advisor, who sold us the policies years ago, is saying, 'Oh, no. You don't want to cash them in. What if one of you dies and you need the money?' The thing is, if one of us dies, the other actually won't need the money.

BTW - we're in France, and covered by the French health system, so we can take that out of the equation.

Thanks for any thoughts!

[Tomconroy]

1. You might want to get a new financial advisor.

[GoneOffShore]

4. I'm actually pretty happy with the other instruments he has us in.

I think he may be a bit one sided on life insurance.

[PJMcK]

2. I did that but for different reasons

When I got divorced, we liquidated the "universal" policies I had set up, (they were essentially "whole life" policies each with an investment component).

It was a good decision. Good luck with your choices.

[GoneOffShore]

7. I am most likely going to cash them out. I wanted the 'hive mind' help of others who have done this.

[bcool]

3. If you don't need the protection of insurance, I'd say cash them in

The purpose of life insurance is to provide some measure of financial protection to the beneficiary if the insured dies. You're paying for that protection, so if you don't need it I'd cash in the policies and invest the proceeds plus the recurring premiums you're still paying on them.

And, if that's truly what your financial advisor told you I'd think about getting another one. Sounds like they're parroting what they learned in financial advisor school - and not analyzing your situation to determine what's best for you.

[multigraincracker]

5. Insurance is like the casinos.

They know the odds and always win in the long run. Ok to bet a little once in a while, but nothing wrong with cashing in your winnings now.

[GoneOffShore]

8. That's a thing that I actually knew, but kind of forgot about. Thanks for the reminder!

[TreasonousBastard]

6. If the survivor doesn't need the money, I'd dump the policies. The advisor is thinking of...

old-school answers to new situations, and is probably getting a commission from the underwriters.

[GoneOffShore]

9. Old school answers to new situations. I like it.

[bottomofthehill]

10. Not at all familiar with French tax law, or even us tax law

But one of the reasons your financial advisor may think you should hold is that life insurance payment on death is not taxable in the US. Cashing the policy's in MAY be taxable. Also are the policies all on you? You and spouse individually, second to die policies? Also are you trying to leave money to anyone else like children or family. There are a lot of good reasons to leave them if you do not need the money to live at this point.

[GoneOffShore]

11. Policies are held in the US. No kids. Two are on me, three on Mrs GoS.

We are both drawing US SocSec, and file taxes in the US and France, but under the tax treaty only pay in the US.

[PoindexterOglethorpe]

12. I'd say definitely cash them in.

No kids? Your only concern is to pay for your needs the rest of your life.

[GoneOffShore]

13. Thank you. I have already cashed one in, and am waiting until the new year for the others.

That way, we don't get dinged on our taxes,