129 - Should I Cancel My Existing Whole Life Policy And Buy Term Insurance?
12/08/21 • 17 min
Scott and James discuss if you should cancel your existing whole life policy and buy term life insurance.
Listener Question
I have listened to your episodes about life insurance and whether or not it’s advisable to purchase a whole life policy. However, I’d be curious to hear what you think about a whole life policy that I bought about 5 years ago. It costs me a fixed $100/ month for a $100,000 policy.
I am 36 years old, single and have no children. I would like to have a family one day, but I’m not sure it makes sense to continue with a whole life policy at this time. Would it make more sense for me to continue with this policy given that it is not hurting my financially, or would it be better to collect the cash value ($6,500) to contribute it to the small amount of remaining debt that I have and get a term life policy that will likely be much less expensive? If I do get a term life policy, how much would you recommend that I purchase?
Planning Points Discussed
- Retirement Planning
- Utilizing Time Efficiently
- Capital Appreciation
- Purchasing Power
- Other issues (IRAs, Inflation, Financial Goals, etc.)
Timestamps:
3:57 - What is Whole Life Insurance?
5:28 - When Do You Need Life Insurance?
9:30 - Term Life Insurance Benefits
11:32 - Growth Rates
13:47 - Why We Own Insurance
15:29 - Tax Planning
16:43 - Aligning Your Financial Goals
LET'S CONNECT!
James
Scott
ENJOY THE SHOW?
Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play.
Leave us a review on iTunes.
Have a money question you want us to answer? Submit one here
Scott and James discuss if you should cancel your existing whole life policy and buy term life insurance.
Listener Question
I have listened to your episodes about life insurance and whether or not it’s advisable to purchase a whole life policy. However, I’d be curious to hear what you think about a whole life policy that I bought about 5 years ago. It costs me a fixed $100/ month for a $100,000 policy.
I am 36 years old, single and have no children. I would like to have a family one day, but I’m not sure it makes sense to continue with a whole life policy at this time. Would it make more sense for me to continue with this policy given that it is not hurting my financially, or would it be better to collect the cash value ($6,500) to contribute it to the small amount of remaining debt that I have and get a term life policy that will likely be much less expensive? If I do get a term life policy, how much would you recommend that I purchase?
Planning Points Discussed
- Retirement Planning
- Utilizing Time Efficiently
- Capital Appreciation
- Purchasing Power
- Other issues (IRAs, Inflation, Financial Goals, etc.)
Timestamps:
3:57 - What is Whole Life Insurance?
5:28 - When Do You Need Life Insurance?
9:30 - Term Life Insurance Benefits
11:32 - Growth Rates
13:47 - Why We Own Insurance
15:29 - Tax Planning
16:43 - Aligning Your Financial Goals
LET'S CONNECT!
James
Scott
ENJOY THE SHOW?
Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play.
Leave us a review on iTunes.
Have a money question you want us to answer? Submit one here
Previous Episode
128 - Can I Unwind a Non-deductible IRA Contribution?
Scott and James discuss the new contributions limits (2022) and how that impacts our taxes.
Listener Question
Can I unwind a non- deductible IRA and revert it to a retail account? My CPA suggested I put 7k aside each year (I did it once) and then put it into a backdoor Roth. My income is high (we paid 51% in effective taxes last year) and I max out my 401k (no match) at work. But here is where it gets complicated- I have an IRA, Roth, SEP IRA (from a side consulting business) and now also the non deductible IRA all in Schwab in a mic of index funds and individual dividend stocks. But my employer’s 401 k plan (Transamerica) is terrible - high fees and not great fund options. I am worried about rolling my various retirement funds (about 400k for me) into Transamerica just to put 7 or 14 k into a backdoor Roth would cost le almost as luch in fees, not to mention oppty cost when forced to sell my holdings to conform to what Transamerica offers.
Given this and the impending demise of the backdoor Roth, can I somehow convert my 7k back to a nonretirement holding?
Planning Points Discussed
- Retirement Planning
- Utilizing Time Efficiently
- Capital Appreciation
- Purchasing Power
- Other issues (IRAs, Inflation, Financial Goals, etc.)
Timestamps:
3:57 - Roth IRA Backdoor Considerations
6:02 - IRS Aggregation Rule
9:30 - Partner's Income
12:40 - Self-Employed Retirement Considerations
15:01 - Required Minimum Distributions
17:36 - Tax Planning
18:22 - Aligning Your Financial Goals
LET'S CONNECT!
James
Scott
ENJOY THE SHOW?
Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play.
Leave us a review on iTunes.
Have a money question you want us to answer? Submit one here
Next Episode
130 - Should I Do Roth Conversions in Low Income Years?
Scott and James discuss if you should do Roth Conversions in years where income is relatively low.
Listener Question
I am currently single and maxing out my 401k. In two more years I'll have been doing this and my Roth IRA for four years total. I plan on going back to training for one year and at that point it will drop me from the 37% tax bracket to 22%. My question is I currently contribute to a Roth 401(k) and I plan to stop doing that and just contribute fully to my 401(k), but in the year I earn less move everything to my Roth IRA, is this the right decision or should I keep contributing part of the Roth 401(k) and regular combined?
Planning Points Discussed
- Retirement Planning
- Utilizing Time Efficiently
- Capital Appreciation
- Purchasing Power
- Other issues (IRAs, Inflation, Financial Goals, etc.)
Timestamps:
3:57 - Retirement Contributions
7:07 - Moving Funds To Pre-Tax
10:27 - Contribution Limits
12:40 - Additional Savings
16:51 - Roth Conversions
18:47 - Tax-Gain Harvesting
20:09 - Aligning Your Financial Goals
LET'S CONNECT!
James
Scott
ENJOY THE SHOW?
Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play.
Leave us a review on iTunes.
Have a money question you want us to answer? Submit one here
If you like this episode you’ll love
Episode Comments
Generate a badge
Get a badge for your website that links back to this episode
<a href="https://goodpods.com/podcasts/real-personal-finance-113622/129-should-i-cancel-my-existing-whole-life-policy-and-buy-term-insuran-17944486"> <img src="https://storage.googleapis.com/goodpods-images-bucket/badges/generic-badge-1.svg" alt="listen to 129 - should i cancel my existing whole life policy and buy term insurance? on goodpods" style="width: 225px" /> </a>
Copy