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Q: Should I Keep My Cash Value Plan if I Wouldn’t Save Money by Switching to a Term Policy?

2018 April 18

If there is no savings from changing to a Term Life plan, then it typically is best to keep the existing plan and just factor those expenses into your budget. You should take measures to ensure that the plan you have is not underperforming (i.e. the dividends or interest are not keeping up with the increasing costs of insurance as you get older). If that is the case, then eventually you will have to pay more for the existing policy than it is worth. You can request an “in-force ledger” from your current carrier, which will project out the life of the policy at the current premium paid and the interest rate/dividends being paid to make sure the policy does not falter in the future.

Remember that, as you pay down debt and increase your savings, your need for life insurance lessens so you can slowly reduce the amount of cash value life insurance you have and then redirect those funds to better investments.

Not sure how much life insurance you need? Click here to use our insurance calculator to make sure you have the right coverage to protect your family.