When I was a small child, my dad bought a $100k whole life insurance policy with MetLife listing myself as the beneficiary. He recently created a living trust and transferred ownership of the policy to me. This has been confirmed by a letter I received from MetLife.
After speaking to a MetLife rep today, here's what I know:
- Due to hard times a few years ago, my dad, as original policy owner, took out a ~$25k cash loan against the policy.
- He hasn't paid back any of the loan interest due annually and the interest has been added to the principal loan amount. As of today, the principal is at $27.7k. An optional ~$1200 interest payment is due by Sept '18. Current interest rate is at a variable 4.5%.
- The cash value is $17.2k and I would be responsible for paying taxes on it if I were to cash it out.
- The policy (minus loan amount) is payable at my dad's 95th birthday (he's 70 and still relatively healthy) or demise.
Questions I have:
- If my dad passed away tomorrow (he's not going to), I would receive ~$72k tax-free?
- This sounds like a depreciating cash asset if I don't make interest and loan principal payments? And the policy can eventually cancel out if the loan and interest are left ignored?
- I don't need the money right now. Cashing out doesn't make much sense to me, does it? Can you help with the numbers? Thanks!
Submitted July 25, 2018 at 06:03PM by LittleOmarLittle https://ift.tt/2AcfBIi
