This feels like a dumb question because I'm pretty financially savvy. My dad took out a life insurance policy on me when I was an infant. It's not massive, it's about a $13,000 policy. He took one out for both my sister and I in case we died before adulthood I guess…? So the premiums have been getting paid for at least 34 years. He transferred the policy to me after I joined the military about 10 years ago, and I didn't really know what to do with it, so I just started paying the premiums, which are $64/6 months. I guess I didn't understand what he was giving me at the time, and it's so minor that I only really remember that I have it at tax time. The net accumulated value is $2700 right now.
Is there any reason at all to keep paying for this thing, or should I just cash it out? It's not as if it's a financial burden on me, but it seems pointless with SGLI. Is there any downside to cashing it out? Also, does that then count as income/dividend, and therefore subject to income taxes?
I'm an E-6 with 11 years, planning to go to 20, if that matters.
Life Insurance Policy Cash Out
byu/OGOngoGablogian inMilitaryFinance
Posted by OGOngoGablogian
1 Comment
The first question you need to ask yourself in any life insurance contract is, does anyone depend on you for income? If no, then there is no sense in having the policy. Secondly, some of these older policies are written more favorably with cheaper fees, so you’ll need to read the fine print in the contract. And finally, before funding whole life/universal life insurance products, you need to make sure you’re other financials are on track(ie emergency fund/TSP/Roth IRAs).