Life Insurance Question

• RedRider1

  

  Ok...serious business time.
  
  I've got a life insurance policy, had it since '01 (I'm 32)....it's only a 50K policy, but it costs me $60/month in premiums. It's one of those fancy ones that acts as an investment vehicle.
  
  I've got some medical bills/debt and the $5000 cash-value of the policy would really come in handy.
  
  Would I be stupid to cash that in? I'd obviously have a new (term-life) policy in place before doing so.
  
  What are some of the pitfalls that I'm not seeing?
• queencitybuckeye

  I personally would do that, and don't see any hidden downsides.
• Con_Alma

  Sound like it's a Variable Universal Life. Is that correct??
  
  Any amount you receive above your cumulative paid premiums over the life of the policy will be taxed at ordinary income rate.
• McFly1955

  

  I sold life insurance for a few years out of college....
  
  There are certain reasons where cash value life insurance is good to have, a lot of time with very high net worth individuals...
  
  In your case, I'd probably cash it in and get 30yr term insurance...There may be taxes, though.....Be sure that the new term insurance is in place before cashing out of the other.
  
  http://hermanagency.com/ ---- I would use that site to get quotes ---- Many loacl insurance companies just use that site for pricing, this wil help you to be sure whoever you are dealing with is honest.
  
  If it's just you, I think you should get 300K, if you have a family and kids, I'd say at least 500K, preferably more, but that's all up to you and your situation...
• RedRider1

  

  Thanks for the feedback.
• vdubb96

  

  All I care about is if I'm the executor of your estate???!!!!???!!!
• se-alum

  

  ^^^^That would be Ricky Gervais!!
• RedRider1

  

  vdubb,
  You're already my mentor (not sure how that title was earned though)...what more do you want.