Life insurance policy?

  • by Eagle 99
  • Dec 02,2015
  • 7 answers

Hi. When I was born my parents put a $25k life insurance policy on me. I'm 25 now and the premium has been transferred to me. It costs about $12/month. I am married and make the majority of our combined income.
I have a life insurance policy worth $150k through my employer which costs about $2/month. We have a decent amount of savings and no debt except for our mortgage.
My parents paid about $3k into the policy over 25 years, and its worth about $1k currently. A pretty poor rate of return.
Should I discontinue this policy and invest the money elsewhere?
Thanks.


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Insurance Answers (7)

Bill 6 months ago

If it has a cash value of $1000 I would cash it in.

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Insurance Pickle.com 6 months ago

Having insurance through your employer is inadequate. People do die in between jobs. Take the coverage that's available, but work coverage should supplement your real plan.

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jmm2112 6 months ago

Never depend on employer group life insurance as your primary life insurance. It can disappear in an instant - for a variety of reasons. You should be getting MORE life insurance on your own. Life insurance is not about "investing" and "return." It's PROTECTION for those who financially depend on you.

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anonimitie 6 months ago

Cash in the policy your parents got for you and stop buying it through your employer. Life insurance is there to provide, primarily, for kids. If you become a parent, get a term policy worth enough to pay for the expense of raising and educating them.
If you die childless, your spouse ought to be able to carry on, financially, without you.
Excerpted from the link below:
In circumstances like the following, you may no longer need life insurance: First, when you and your spouse have accumulated enough assets and income streams to independently care for yourselves. Second, when your children are self-sufficient adults. Third, when your estate is too small to owe estate taxes or liquid enough to pay the estate taxes.
Most estates are too small to owe estate tax and most adults can care for themselves. Parenthood is the usual reason for life insurance.

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Ricki 6 months ago

Life insurance is almost always a poor investment except for the people selling it.
$12 a month would get you a pretty good term life police IF you need more life insurance. $150k is not a lot of money for your spouse to have to survive on or replace or income since you said you make the majority of income.

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Cupcake's Princess 6 months ago

It depends on whether you want it as a life insurance policy or as an investment. As an investment, I agree it's not a good one. But, if you want to keep the life insurance, $12 a month is $144 a year. You'd have to live past age 173 to pay more premium than a beneficiary would get.
Of course, you could almost certainly get a term life policy for even less. Term life is more flexible. It sounds like you don't need life insurance now, but may if you have children for the years between their birth and graduating college.
If it were me, I'd cash it out, invest the $1000, add more than the $12 per month premium, and keep that as an emergency fund or college fund for future children. Then, I'd buy a term life policy when I had my first child to cover me until my last child graduates college. That's the most flexible approach.

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lucy 6 months ago

The reason the cost of the employer's insurance is so cheap, is that most likely your employer pays the majority of the premium as a benefit, like health insurance, pension etc. It has (no) cash value and only pays (if) you die while working for this company. If, you leave the company, or get fired or laid off, then no more life insurance.
Is there an end date when the policy will be paid off/mature? I don't know life insurance, but guessing the policy was to age 30 or to age 40? Life insurance is never a good investment, but to provide for (whoever) survives you.

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