Tag Archives: Decision

Replacing cash value with cash value.

The classic objections to replacement strike with particular force if you’re contemplating replacing one cash value policy with another. You’d have to pay another hefty front-end load. And you’re older, so your new premium would probably be higher. Compare term life insurance quotes quotes online before you make a decision. Still, if your current whole life or other cash value policy is high in cost, and if the proposed replacement is low in cost and provides equal or better coverage, the switch could be worthwhile. Such a situation is most likely to arise with policies issued quite a few years ago, especially nonparticipating cheap life insurance policies. Replacing cash value with term. Since we recommend term insurance for most buyers, you might think we’d be all in favor of replacing cash value policies with term policies. Not necessarily so. Once you’ve bought a cash value policy, assuming it was a reasonably good one, it often pays to hold on to the policy. In effect, the company amortizes its front end load during the early years of the policy’s life. So, it will take some time before cash values and dividends begin to accumulate to the point of compensating for the sizable premiums you’ve already paid out. Get a life insurance quote from several providers to compare rates. If you switch the policy soon after purchase, you risk taking a substantial loss. If you’ve already paid in for a number of years, you might be approaching a time when dividends and cash value buildup start to justify your substantial investment. In other words, don’t pay for the meal and then leave before the main course.  [...]