Cash in life insurance policy?

[sandybeth]

I have an AXA Equitable life insurance policy (modified premium variable whole life) with a face value of $100,000 and a net cash surrender value of $61,000. I am 66 years old & in good health. No dependents. Does it make sense to keep this policy or cash it in and invest the money into something else? My cost basis for this policy was $35,000 and I have owned it for 20 years.
SB

[Ron Peterson]

On Monday, May 13, 2013 9:00:03 AM UTC-7, sandybeth wrote:
> I have an AXA Equitable life insurance policy (modified premium variable whole life) with a face value of $100,000 and a net cash surrender value of $61,000. I am 66 years old & in good health. No dependents. Does it make sense to keep this policy or cash it in and invest the money into something else? My cost basis for this policy was $35,000 and I have owned it for 20 years.

If you are healthy, check to see if you can convert it to an immediate annuity.

Or, if you are not yet taking SS, live off the policy to get higher future SS benefits.

--
Ron

[Bill Woessner]

Seeing as you have no need for life insurance, my advice is to surrender the policy. The only down side is that doing so will add $26k to your taxable income. Depending on your individual circumstances, you might end up owing quite a bit of taxes on that income. Surrendering the policy could push you in to a higher tax bracket. But there's also the danger that the increase in your taxable income will increase the taxable portion of your Social Security benefits. Converting the policy to an annuity (as Ron suggested) can help alleviate the tax burden.

--Bill

[Timothy Hider]

On Monday, May 13, 2013 12:00:03 PM UTC-4, sandybeth wrote:
> I have an AXA Equitable life insurance policy (modified premium variable whole life) with a face value of $100,000 and a net cash surrender value of $61,000. I am 66 years old & in good health. No dependents. Does it make sense to keep this policy or cash it in and invest the money into something else? My cost basis for this policy was $35,000 and I have owned it for 20 years.
>
> SB

Does it make sense to keep this policy or cash it in and invest the money into something else? That is a really good question, and at the end of the day is your decision.

If no dependents, and/or no need for life insurance a 1035 exchange to an annuity (like both Ron & Bill suggested) might be something to consider.
Here are some questions/comments that might help your decision making process.
Is there an immediate need for the cash value?
How well is the policy performing?
If the policy has a high cost of insurance, after careful analysis it might help your decision making process. If the policy is performing well, has low cost of insurance charges, and you do not need the money, it could be worth keeping the policy.

This is not advice, and or recommendation. Best of luck!