About five years ago, my wife was working as a recruiter for a national insurance company and ended up purchasing a whole life insurance plan. We had just started dating at the time, so I wasn't actively involved in her finances yet, but now that we're married and looking to gather the money to make a down payment on a house, we thought it might be time to reevaluate.
Admittedly, I know nothing about her policy, other than the approximate monthly payment she's making, a rough estimate of the total value right now, and the fact that it's a whole life insurance policy. We are meeting with a former colleague of her's who sold her the plan later today, so I wanted to understand our options a bit more up front before getting the pitch from the rep.
The first question we have is "Is this the right place for our money right now?" We both are doing fairly well for ourselves, have no dependents yet (but likely will in the next two years), and have plenty of other accounts that are saving toward retirement (our 401(k)s are getting maxed, spillover into IRAs, rainy day / emergency accounts, and some other more-active investments). From what I have read so far, it seems like Reddit has a more-often negative opinion than not on these policies, but what, if any, reason is there to keep this policy? Or should we get out of it in some way and reevaluate down the line when we have children?
If it appears that this policy isn't great for us right now, the next question is "Is it worth it to get out of it?" If we really need this money to put toward our house, what are the tax implications on the contributions and the earnings on that amount she's put in? What if we don't need it immediately (say we're able to cover the down payment with the account we have exclusively set aside for that purpose) - are there still better options at the end of the day for a longer-term investment that make it worth getting out of this policy now?
Essentially, the whole world of insurance has always confused me and I want to make sure our long-term planning is in order now that we have joint finance implications as a married couple. Regardless of whether the money in this policy is used directly toward our down payment or reinvested in a more appropriate vehicle, it seemed like the best time to reach out to r/personalfinance and get a better understanding of what this policy actually means and what we can do!
Submitted January 12, 2017 at 08:25AM by BaconWrappedEggplant http://ift.tt/2jaRQWM
