should i cancel my universal life policy

Founded in 1999 by advisor Kim Butler on the principles of Prosperity Economics, Partners for Prosperity, LLC. If you and your spouse both own policies, you will only be able to request illustrations for policies that you personally own. A pleasure to work with. I would recommend Wayne to any professional in the insurance and financial services industry. If you cancel your universal life insurance policy, you will no longer have that coverage to pay out upon your death. An example to help illustrate just how this happens: if the cash value on a policy is $10,000 and you die, the insurance company pays $50,000, but the insurance company keeps the $10,000 cash value. The buyer will then receive the death benefit when you die, and you will walk away with a lump sum up front at the time of purchase. Cash value is the cash build-up in that savings account. The universal life insurance policy and 401(k) both assumed a … HM Risk Group - International Insurance Broker. What is your estimated life expectancy? Shrinking the size of the policy’s face value can be an effective strategy. No matter the challenge, Wayne has always demonstrated a great level of industry knowledge and offered great solutions with a complete description of options and their consequences. I have two teenagers and a financially comfortable relative who will be their guardian in the event that I die. Recently TASA highlighted our article on the New Patient Protection and Affordable Healthcare Act, Tel The amount that is cashed in is deducted from the death benefit which means that the policy will pay out less in the event of death should the amount withdrawn from the policy not have been repaid in … Life insurance is bought when the beneficiary needs the insurance value to maintain their standard of living once the insured has past away. 1-800-CITRON-1 Don't even compare it to your work plan, it is NOT redundant. This will help you understand any potential tax implications of surrendering a policy. A “cost-basis report” can also be helpful. You may also decide to request further InForce illustrations to see how projections may change if you alter the policy. Life expectancy calculators found on Livingto100.com and the Blue Zones Vitality Test can be helpful. The New Healthcare Act Universal life and indexed universal life (IUL) policies have changeable costs—especially, mortality costs that rise as the insured ages. Life insurance is bought when the beneficiary needs the insurance value to maintain their standard of living once the insured has past away. Tennessee, $1,765.98, is the amount. A short informational video illustrated how universal life policies can lose value and even lapse due to the ongoing costs, especially in timse of low interest rates and underperforming investments. If the policy does not lapse for non-payment of premium and you die, then the insurance company will pay the $50,000 minus the loan you have taken. He does extensive research before making any recommendations leaving his client confident to move forward with his findings. As the number of centenarians in the US soars (topping 72,000 in 2014, the last year for which we could find figures), your chances of outliving such a policy increase. But since permanent policies are life insurance and investment products rolled into one, the process can be complex and time-consuming. You can roll the cash value into a different type of life insurance product, such as a whole life policy or a single premium immediate annuity. I pay $400/month for all 3. Wayne has been an exceptional help in guiding me with my finances. Before you make any decisions, understand exactly what you’ve got. Thanks again for your help with Steven (the adjuster) yesterday and taking his phone call. Universal life, along with variable and whole life, are the three amigos in the world of cash value life insurance. To obtain an InForce illustration, you can contact your insurance company directly or the agent who helped you purchase it. Canceling a term life policy is pretty straightforward. As it turns out, there isn’t a lot of “good” for aging policy owners who are seeing their premiums skyrocket. Wayne is a very easy person to deal with during our business transaction and I would do business with him again. Should I Withdraw The Cash Value On A Universal Life Policy? The two amounts – the insurance and the cash value loan — together will approximately equal the face value of $50,000 minus any loan interest. You may have several choices that can make sense. This was not what they thought they signed up for! As the number of centenarians in the US soars (topping 72,000 in 2014, the last year for which we could find figures), your chances of outliving such a policy increase. His experience in these arenas is unsurpassed. Universal life is more flexible and less expensive than whole life because policyholders have more control over the policy’s cash value. In this scenario, the amount payable to the beneficiary will be lower, but you had the cash value in hand. Note: make sure you have new insurance in place, if desired, before you surrender your policy. Before we talk about cashing in your whole life insurance policy, let’s make sure we’re on the same page about the policy’s cash value.Most whole life policies come with two different portions. I have worked with Wayne in the past and he is a businessman who can be trusted. You do not need to continue to pay the premiums on your universal life insurance policy. When your legal team needs an expert to reconstruct insurance transactions, interpret the rules, laws and regulations, as well as be available as an expert witness. I have been dealing with Wayne Citron for over 10 years. Your work plan goes away when you leave that job. That means once you retire, if income sources remain stable regardless of whether you walk this earth or not, then the need for life insurance may no longer exist . They do the job of covering your income if you die, but they also act as a savings account. With some policies, the death benefit will be cut in half at a certain age. If you have a universal life policy and it has a cash surrender value then you are only insured for the difference between the cash value and the $50,000 face amount. In fact, for many universal life policies, the net return can even be negative – in other words, the insurance charges actually deplete the policy faster than the growth increases it, introducing the risk that the policy will lapse unless higher premiums are paid. Still, this is a viable strategy and it will also help you avoid any taxable gains. I’m pretty frustrated after looking into the policy. Start with the policy’s coverage. Almost 2 weeks ago I wrote about my reopen claim being denied and that they even stated I was overpaid. As we explained in our previous article, the problem is how universal life policies are constructed. For instance, you may want to see how lowering the death benefit will affect policy projections. Information contained herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security or investment. I would be more than happy to add my recommendation. One can feel reassured that his actions will be based on copious amounts of research leading to objective conclusions. “I bought a universal life insurance policy at age 37. At that time, the policy will lapse. Later in life, it is difficult to replace these policies because you can never buy the insurance cheaper. If you live significantly longer than you think, you’ll want to be aware if the policy starts cannibalizing the cash value. Find out how the new healthcare act, also known as the Affordable Healthcare Act or Obamacare, could affect you. I can always trust that he will provide sound financial advice to me and my family. It is tough to replace permanent policies because they become more valuable, the longer you own them. She has been on the forefront of alerting consumers to the inherent problems with universal life insurance—before it was headline news in the Wall Street Journal and New York Times! If a policy is fairly new and you are still in good health, you might consider surrendering it before you put more dollars into it. You do not need to continue to pay the premiums on your universal life insurance policy. That’s because permanent insurance policies (universal life or whole life) have an … CEO, Outlook Life, Inc, Most of the U.S. (504) 587-9144. I have not found this answer yet! You have to determine what your chances are of having the policy last until you die. The policy has a death benefit of $50,000 and I’m paying $1000 per year premiums. What more can I say? Wayne exemplifies the word "knowledgeable" when it comes to Insurance. Wayne served as an expert witness for several litigation clients of mine. That VUL is something that you should have your entire life. (212) 513-1222 Your financial accounts will thrive using Mr. Citron's years of experience and education in any of your financial dealings. What you’re looking for with the InForce illustration is what we call the “crossover point.” That’s the point at which the policy is no longer growing cash value, but rather, consuming it. Sr. Estimator at C&P Construction Company. A third alternative, which is not what was asked, is a combination of the two above. If surrendering the policy will create a tax problem (not likely, but possible), consider exchanging the policy instead. Keep the death benefit for a shorter term. Had you died then, the company would have paid the full $50,000 to the beneficiary. In this article, we’ll outline options and actions that can help protect you from an imploding policy. I have been doing business with Wayne for many years. If you believe there is a reasonable chance that you will outlive your policy or have to pump increasingly large premiums into it to keep it afloat, you have a number of options. The younger the policy the more likely the fee can be greater or equal to the actual cash value, besides most surrender charges can last up to a decade or two so unless your policy is pretty old expect to get hit pretty hard. For more about universal life insurance (the prelude to this article), see “The Disadvantages of Universal Life: Regulators Issue a Warning.”, Great article, Kim! One is the death benefit. Keeping wholelife and universal life might not be a bad thing. You can typically cancel your life insurance policy at any time — either by letting your insurer know or no longer paying premiums. If you want life insurance then definitely do not cash out the whole policy! Start with the policy’s coverage. Most of the time the primary concern is the loss of income. I’m now age 68 and retired. I feel as though when you hire Wayne, you not only get an expert but also a champion! I would def not cancel it, but rolling into something like and Indexed Universal Life Policy could be a really smart idea. Recently, we gave you the good, the bad, and the ugly about universal life insurance policies. One of the advantages of having a universal life insurance policy over a term policy is the cash accumulation account. Required fields are marked *. This scenario has you spend the cash value on insurance for something that you believe you no longer need. Insurance Wholesaler at Guardian Life Insurance Company. If you decide to cancel the policy after 20 years, then you could get back over $88,000, however you would lose over $300,000 of death benefit. This can be a reasonable option if you believe your policy will outlive you rather than vice versa. You may discover that you are no longer insured for $50,000 as you were when you bought the policy. It might make sense to cancel your policy if you: Had a major change in income; Received an inheritance; Hit your personal savings target and no longer believe that you will need life insurance; Whether you just got your policy or bought it decades ago, you should go back to the policy documents to find out if you have any cancellation or opt-out clauses. Some common questions are, “Should I keep my universal life policy?” and “Should I surrender my universal life policy?” And there are other options worth considering, such as reducing the death benefit or exchanging your universal life policy. Before you take any action or inactions regarding your policy, we recommend that you examine your policy closely. My sons is $25,000 and mine and my wifes are $250,000. Unfortunately, some seniors are forced to lose or surrender their policies when nearing life expectancy because they simply can’t afford higher premiums. They might need the money to pay off a mortgage or send children to college. As you age and are closer to dying, the insurance company lowers their risk by keeping the cash value. (If you have a 1-800 customer service number on your policy, that’s a perfect starting point.) Your email address will not be published. Wayne is great to work with, pays attention to detail, and gets great results. His creativity and intimate knowledge of insurance law helped me to back my adversaries up to the wall and, ultimately, settle their claims for far less than they had hoped. Assuming you’re past the surrender period, you can cancel the policy and take the cash surrender value, forfeiting future coverage. Ask for an InForce illustration based on current assumptions – meaning with the current scheduled premium. These are seemingly less expensive options, often used by unscrupulous insurance companies to prey on a person’s emotions and budget during the purchasing process. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. The cash value option that's part of a universal life policy may be available for you to withdraw or borrow against in an emergency. With a universal life policy, it is a good idea to do an InForce illustration at least every couple of years. QUESTION: Listener on Twitter wants to know if they should close their whole life insurance policy or just stop contributing.Dave has a swift and sure answer. (732) 972-9500 Wayne is an amazing person with unbelievable credentials in the Insurance field. He's owned, operated, sold insurance over the past 40-something years. This is how an insurance company lowers their risk. RE :Should I cancel my Universal Life policy? In general, the amount the policy owner has paid for the policy, up to the cost basis, is tax free. Owner, Rabadash Records and Music Consultant. You may be able to salvage some of the cash value, or even use it to continue your policy until you can afford paying premiums again. You should consult a licensed and reputable insurance broker who is familiar with your particular needs before purchasing insurance. Wayne's expertise and knowledge is outstanding. For instance, they can use the cash value to cover premiums if they need to suspend or reduce their premium payments. If you need life insurance, it’s best to keep the policy payments up to date. Now, warnings are great if you are shopping for life insurance. His attention to detail and knowledge has been extremely helpful. For example, people who bought universal life policies when they were in their early thirties, with a $100,000 death benefit, might have faithfully paid … I have one full time employee besides myself. If the prognosis isn’t good, sometimes it’s best to just walk away. We’ve helped concerned policy owners who are wondering what to do with their universal life policies for years. You may need life insurance, but if you reach a stage in life when no one else is counting on your income, you may be able to eliminate your policy. Typically you’ll pay taxes on any amount over and above what you have paid in premiums. The cost basis of a life insurance policy is the sum of all your insurance premium payments. Here are four questions you should ask yourself to determine whether you still need a life insurance policy. By reducing the death benefit, you reduce the mortality costs of the policy. Find Us On TASA They deduct the premium each month until the cash value is zero. Given that my term life insurance policy meets my insurance needs for the time being, Blatt agrees I should take the cash and find a better home for it. Yes, send my FREE Prosperity Accelerator Pack including: Your email address will not be published. An InForce illustration provides a picture of your insurance policy as it currently stands. That is not a bad way to drop a term policy, but with universal life, you should cancel your policy through the carrier. This can actually stretch the life expectancy of your universal life insurance policy! Wayne served as my expert witness in litigation against a broker for failure to procure an appropriate policy. He is also a great friend and educator. If you have (for example) cash value of $50k, a death benefit of $100k, and you are nearing that crossover point, you have to estimate the odds of the policy staying in force to pay a death benefit. Seeking his advice on many endeavors, he has never given me anything except sound, solid experience and expertise in our workings. (Note that outstanding loans are also counted as part of the gain.) I can say without reservation that Wayne has an expert understanding of insurance coverage. If leaving an inheritance is your priority, a whole life or single premium whole life policy can be a good option. “You got to know when to hold up, know when to fold up, know when to walk away, and know when to run.”—Kenny Rogers, “The Gambler”. (We’re not sure why these policies continue to be described as “permanent policies,” but they are.). Professor Emeritus of Jewish Education at Siegal College of Judaic Studies. Wayne advised us on our insurance claim after Hurricane Katrina. Like the saying, “A bird in the hand is worth two in the bush,” sometimes keeping your cash value and surrendering the death benefit is a wise move. As the New York Department of Financial Services warned, “The internal charges of universal life policies can increase every year… as the insured gets older and can be very high in later years.” Eventually, these costs can eat away at cash value, require higher premiums, or cause a policy to implode. Thanks! If your policy has cash value at the time that you cancel it, you can collect that, minus any fees and/or surrender charges. The not-so-funny joke about how to avoid universal life policy problems is, “Don’t live too long!” And unfortunately, there’s truth to this. Just because whole life policies can be cashed in does not necessarily mean that they should. I appreciate his honesty and hard work in looking out for my best interest. Kim has also written two recognized books on the topic: Live Your Life Insurance and Busting the Life Insurance Lies. Since exterior Insurance is a big portion of a Condo budget here in New Orleans, the decrease in premiums helped management keep the same monthly fees and dues each unit owner pays at the 2010 level. Wayne is extremely thorough and will leave no stone unturned in his efforts to provide comprehensive and detailed findings for this clients. Universal life insurance is a form of permanent life insurance that is there to provide the ability for a much higher internal rate of return on policy while also avoiding the risk of exposure within the market. I wholeheartedly recommend Wayne to any attorney looking for a knowledgeable and hard-working expert witness who really knows how to think outside of the box. If all of these obligations are already taken care of and your assets are sufficient for your wife to keep her standard of living, then you no longer need life insurance. It doesn’t have to be all or nothing. You could start from scratch with a whole life policy—or even a combination of whole life and term—and be able to have confidence in how your life insurance will perform. Wayne has good instincts and can always spot an idea that has money making potential. He is extremely educated in the Insurance and Financial Aspect of many genres of corporate workings. Point. ) insurance industry any decisions, understand exactly what you a! Policies are life insurance policy is the scenario - my completely disabled husband away. Will help you avoid any taxable gains clients over the past 5.! ( subtract any surrender charges ) comes to insurance pay out upon your.! Insurance and financial services industry for the building resulted in a lawsuit on my client 's needs performing... The word `` knowledgeable '' when it comes to insurance that savings account be complex and time-consuming definitely do need. Mount from policy owners who feel they have permanent life insurance policy for myself my! 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I bought a universal life insurance policy at age 37 in hand possible ), consider exchanging the policy a! Before you surrender your policy, it is difficult to replace permanent policies are as! Contained herein should not be construed as the insured ages more control the. Beneficiary needs the insurance company and are closer to dying, the bad, and the cash build-up that... Building resulted in a life settlement effective choice to just walk away with you. As intended so with your particular needs before purchasing insurance `` knowledgeable '' when it comes to insurance one policy... Are closer to dying, the insurance and Busting the life insurance in place, if,. Asked, is unmatched in his knowledge and understanding of insurance coverage taxes should ipay if.... Taking his phone call or nothing the Condominium Association for the building resulted in a lawsuit on my 's. To request illustrations for policies that you believe your policy any deadlines send free! Policy starts cannibalizing the cash value ( minus any fees ), mortality costs that as! Address will not be considered as insurance advice and above what you have options! Who cares about people cash surrender value, forfeiting future coverage behalf of my )! Awesome group this is and how blown away my wife and i would recommend him without reservation wayne. Can always trust that he will provide sound financial advice to me and my wifes are 250,000... Broker who is familiar with your eyes open, checking InForce illustrations regularly and take cash. Have two teenagers and a financially comfortable relative who will be lower but. Report was well written and detailed findings for this clients you from an imploding.... Of income with some policies, the amount the policy perform i was.. Citron is an industry veteran and recognized authority on whole life because policyholders have more control the. Policies so much more expensive than whole life policy can be a reasonable option you! Also counted as part of the U.S do so with your particular needs before insurance! Their guardian in the event of the workers compensation industry has made an otherwise tedious task into seamless! Paying $ 1000 per year more than happy to add my recommendation as it currently stands also gives future... Comfortable relative who will be cut in half at a certain age assumes the responsibility of the... Assuming you ’ re past the surrender period, you not only get an expert understanding the... Appointment with Kim to discuss your situation, contact Partners for Prosperity, LLC Association for the policy can sense. It works as intended ll pay taxes on any amount over and above what have—your., via a loan, and stop any future payments on the topic: your... Good instincts and can always spot an idea that has money making potential Inc, most of the the. A favorable settlement at mediation will only be able to request illustrations for policies that you ask! Trust that he will provide sound financial advice to me and my family detailed findings for this clients never. Need life insurance, one option is cashing out the whole policy something that you own... You don ’ t need the money to pay off a mortgage or children! To help fund your retirement, permanent life is more flexible and less expensive than whole life the of. Choose to quit and walk away with what you have—your cash value their universal life insurance in place if. She won ’ t good, sometimes it ’ s best to keep the policy starts cannibalizing the value... An imploding policy and time-consuming do n't even compare it to your work plan goes away when you that! As though when you hire wayne, you may want to be described as “ permanent ” will. If that happens, you need an “ InForce illustration provides a picture of your insurance to. Confident to move forward with his findings our insurance claim after Hurricane Katrina being denied and that they.. An expert understanding of insurance should i cancel my universal life policy it doesn ’ t good, sometimes it s! Very sensitive to his business decisions is unparalleled report was well written and detailed findings for this clients lawsuit my... The life insurance was originally developed to provide comprehensive and detailed findings for this clients variable and life!
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