Lux Investing

I have a whole life insurance and want to take the cash value, what is the best way to do it?

After reading about buying term and investing the difference, I found out that I can save hundreds of dollars a month by buying a 30 year term policy and get more coverage. With the money I saved, it gives me options on what I can do. Besides investing it, I can also pay a little more into my debt payments. I have about $32k in the cash value, after surrender charges, its $28k. I want to get the most out of my money, but not sure what to do. I can't put it all in my Roth IRA. I don't want to save it in my bank account since I only get 0.75% interest on it.

Public Comments

1. dun surrender . its better to leave it for long term
2. I don't know how old you are, but you can do a 1035 exchange and move the net surrender value into a variable annuity. You can learn more about variable annuities here: http://finance1o1.blogspot.com/2007/01/annuities.html Or you can take the money. If you do this way, you should setup an emergency fund if you haven't already. You should put the money into money market funds. It takes at most 7 days to get the money out of it. Or you can take the money and open an online savings account such as EmigrantDirect or HSBC Direct that gives 5.05% APY on your savings. Or you can invest it into mutual funds outside of your Roth IRA. There are so many things you can do.
3. You call the company and tell them you want to cash it out. They send you forms, THEN they send you a check. Max out your Roth, max out a traditional IRA if you can do both, put 6 months of emergency money in the bank, and do basic mutual funds with the rest. Charles Schwab won't charge you an annual fee if you have at least $10,000 in funds there, I LOVE Schwab. Then you get to manage and pick your own funds.
4. "buy term, invest the difference" is sometimes too simplified of an approach depending on your situation. Talk to a few different agents to get multiple perspectives. If you have a taxable gain, an annuity wrapper will keep you from paying the income taxes due upon surrender. There are a lot of good low-cost options. There are too many important details to consider. Talk to a few different folks and pick the best one for you.