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Advice on Cash Value Life Insurance policy

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  •  flashdoc 
    Participant
    Status: Physician
    Posts: 3
    Joined: 07/24/2018

    I have a cash value life insurance policy purchased in my resident days.

    11 years later, the value is currently about $3000 over the basis.

    Now that I am more educated (thanks to WCI) I can see this was a terrible purchase.  I have adequate term life insurance, and the investments available in the account are not very good, with high fees.  I want to dump this policy and move my money elsewhere.  Are there any downsides I’m not considering?

    Would move money into my taxable vanguard account or pay off mortgage (4.5% interest) on our first house, which we kept as a rental property.

    #179915 Reply
     jz 
    Participant
    Status: Physician
    Posts: 602
    Joined: 01/09/2016

    Cash it out. The only downside is non-basis (growth) portion of the $3000 will be added to your current income tax bracket this year.

    #179927 Reply
     Peds 
    Participant
    Status: Physician
    Posts: 2409
    Joined: 01/08/2016
    11 years later, the value is currently about $3000 over the basis.

    Click to expand…

    wow

    you literally missed out on one of the greatest bull runs.

    #179934 Reply
    Hank Hank 
    Moderator
    Status: Attorney
    Posts: 1025
    Joined: 03/27/2017

    Avoid the sink cost fallacy. Run the numbers on this as an investment going forward.

    You may or may not want to drop the policy, but don’t kick yourself over what could have been. Focus on the merits of this (or lack thereof) from this point forward. First step is to get an in-force illustration.

    #180511 Reply
    Liked by Zaphod

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