Cash Out My Whole Life Policy?

foreign Chicago hi Sue how are you I'm doing great thank you for taking my call sure what's up um my husband is 62 and I'm 58. we've been married 38 years we have no debt and our net worth is a little over a million um 200 000 of that is in real estate 800 000 in stocks and bonds in 1997 um we were raising four little boys and my husband went through leukemia in a bone marrow transplant and so the only life insurance we could get was a whole life and it was a six hundred thousand dollar policy I'm Dave and Rachel we put in since 1997 uh ten thousand dollars a year into this policy now what fast forward um 15 years ago my husband had a heart attack and five bypasses longevity in his family the men um just historically do not live long lives so here is our caveat right now all the boys are through college married we have 10 grandchildren and this life insurance policy the cash value is now around 240 thousand dollars I am just my husband and I are trying to make this decision he is still working he has an income of about 80 000 a year he hopes to retire at about 65. my income a year after coved I'm a Christian motivational speaker so my my uh income dropped from about 50 000 a year to now twenty thousand we are trying to make the decision of whether we cash in this whole life policy and put into our stocks and bonds portfolio give them the fact of his um life expectancy what's the face value 240. that's the cash value what's the difference yes sticks 660 000 right now okay um wow okay so basically if if he dies or no when he dies we all die yeah when he dies I understand you if the policy is in place you will receive 666. okay that means they're going to keep 240. so you really have a four hundred thousand dollar insurance policy correct that's really what you have Okay um and so the swing is do you need the extra 400 to live and the answer is no you don't so if you cashed it out and put 250 in there or if you keep it either one you're going to be okay either way financially speaking mathematically speaking agreed agreed okay so this really comes down to um a bet that you're making not based on the past but for four hundred thousand dollars I'm gonna bet that I'm gonna put in less than four hundred thousand dollars before he dies right mathematically it's it's very cold-hearted but it's a math thing okay and so it's um you know uh um and what's the can she save another four hundred still it no I'm saying she's paying for a 400 000 life insurance policy in essence they are paying okay okay and um if he dies before you put 400 into it if you put 300 into it you gained by a hundred mm-hmm right and that's that's the math and is it currently and it will be forever ten thousand dollars yes and that and that in our first um since we got it we fund that first and then our employee matching and then our roths that's been our yeah well that would not be my order of priority but if we're just making bets uh at ten thousand dollars into four hundred thousand that's 40 years is it not yes it is so if you're just placing bets on the math you're going to keep it okay it's a crappy product I probably would have dropped it 15 years ago or 10 years ago uh and save that money and quit then and I hate it I I think it's a horrible product but at this stage what it's come down to is if you're going to get 666 upon his death which is a weird number by the way but um but the uh if you're going to get that upon his death then um and they're going to keep 240 of yours that's uh 426 difference uh then he's got to live 42 years before you don't come out ahead if I'm doing my math right am I doing something wrong I mean 400 divided by 10 is 40 isn't it yes yeah yes and so 420 divided by 10 is 42 years he's 62. so he's got to make it to 104. um probably not happening I mean I'm probably not making it to 104.99 and I got longevity in my family so you know right but um and she go she comes out better ahead doing that versus catching it all out taking that 250 and putting it in an investment yeah I mean that's a very simplistic way of doing it okay if we want to get one more level of sophistication we could say the present value of that money right in other words were you to invest ten thousand dollars a year how long before in at an 11 rate of return in your stocks and bonds what the market is returned how long before you'd get to four hundred thousand I don't have that off the top of my head but it's probably still 20 years right so if if I'm tracking with you right because this has been a dilemma for me you know we're pretty financially Savvy we did Larry Burkett before we heard of Dave Ramsey and have done the envelopes before they were cool and I I think about if I pull out or we I'm sorry pull out the the cash benefit of 240 000 approximately and I invest that plus I'm adding I'm freed up ten thousand dollars a year right your your equation is more of complete than mine it kind of swings this pendulum the other way well you got to get if you do that you got to get to 666 but you'd get there in with the 250. seven years six years exactly so what you got me you got me you didn't need me I needed you okay oh yeah you're exactly right you're exactly right I left a variable out of that oh wow that was dumb okay you got it you're exactly right no you're exactly right um yeah yeah so what I would do is is run the couch sit down with your investment advisor and run the calculation if you invest it your current rates of return on your Investments 250 plus 10 000 and how quick do you get to 666. that's the equation and if it's at 11 I think you're there in about five or six years is what I think it's going to come out I'm doing that in my head but I'm not far off um so yeah I am gonna cash it out good I feel better because I hate those dead gum things I know ah I was having trouble keeping it so you can take his job push your motorbike Christian motivational speaker yeah you can you know we got we have a need for you you also do math

Channel: The Ramsey Show Highlights

Views: 69,027

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, Cash Out My Whole Life Policy?

Id: ZzV7a7lZ9ng

Length: 7min 50sec (470 seconds)

Published: Sat Nov 19 2022