Help finding a question I posted....

[KellyJef]

I posted a question a while back asking for advice about whether to cash in a life insurance policy and use the money to pre-pay our funeral expenses.

I want to review all the helpful responses I got to my question, but I can't find the thread.

Can anybody help?

[disneysteve]

life insurance -- how do you know when no longer necessary

[KellyJef]

Originally Posted by disneysteve

life insurance -- how do you know when no longer necessary

Thank you very much -- I don't know why I couldn't find it.

[Robert742]

Hi Kelly,

I read the thread you were looking for, and I want to clear up a misconception.

Since you were looking for the thread, I assume you still have the universal life insurance policy. If not, it is still good to clear up the misconception.

If you bought the policy in the 1980s, the agent stopped earning commission on it long ago. Life insurance usually pays a large first year commission, then a very small commission for the next 7 years or so.

Your agent has little, if any financial incentive for you to keep the policy. Your agent would be more interested in taking the cash value from your current policy, and getting you to buy another type of policy, like a final expense policy, to earn a new commission. Even the insurance company would prefer you to drop the policy rather than pay the death benefit. People paying for life insurance for decades and lapsing the policy before they die are hugely profitable for life insurance companies.

Paying for a permanent life insurance policy, and then canceling it before you get the death benefit, is what makes these policies a poor idea to buy for many people in the first place.

You want to consider the cost of the premium in relation to the return you will get from the death benefit. Dropping the policy might be the best solution for you as you describe it, and from the details you provide, you seem to not need life insurance.

The policy you purchased performed terribly, and the agent selling you the policy did not do right by you -- probably because the agent did not know what he/she was doing, or did not have much knowledge about life insurance.

But dropping a policy is a much different decision than whether you should have bought it in the first place.

I would talk to a few local, experienced independent life insurance agents. A good agent will help you weigh your choices, tell you the pros and cons of each choice, and help you make the best decision for you. Avoid agents offering one course of action that has no downside, and involves spending more money on a new policy.


If the agents you speak to recommend you keep the policy, hear the agents out and see if their reasons make sense to you -- it may be better advice than you think.