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Cancel Your Whole Life Insurance: 3 Reasons Why You Shouldn't - YouTube
Channel: The Money Advantage
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I want to give you the top three reasons
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not to cancel your whole life insurance
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policy now chances are if you're
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watching this video you probably have a
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whole life policy in place that you
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bought earlier for really specific
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reasons and now you're having some type
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of life transformation or change either
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a change of opinion or a hardship that
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you're facing and maybe you're concerned
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about how you're able to make those
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premium payments and is it really worth
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it in the end for you
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well first of all I want to remind you
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why you probably have a whole life
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insurance policy in the first place the
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reason is that you wanted to have a
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death benefit that would pay out to your
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family your beneficiary your heirs no
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matter when you pass away now this isn't
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a term product where there's an X and
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end point on it this is a whole life
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product meaning it lasts your entire
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life meaning that there's a guaranteed
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death benefit that even if you were to
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live a very long and healthy life even
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if you lived all the way to age 121 when
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this policy in dows then you would live
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out the whole timeframe of your whole
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life insurance policy and the entire
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death benefit would pay up to you
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instead of to your heirs so either way
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you are going to get a death benefit now
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whole life insurance is also a place to
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store cash where you have guarantees
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safety and liquidity and growth
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now that provides a lot of certainty in
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your life because you have this store of
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capital that you can use and leverage
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for any reason in your life now as that
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cash value continues to grow with
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uninterrupted compound interest you can
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take a loan against that policy and put
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that money to work in another asset
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essentially you can get two returns at
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the same time with the same money that's
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why we call it an and asset and one of
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the most important features of this is
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that the cash value is a guaranteed
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amount it's not going to drop in value
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and it's gonna continue having that
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uninterrupted compound growth so you're
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never gonna reset the compounding and go
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backwards now those are some really
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powerful reasons to have life insurance
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in the first place because of the
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guarantees you're able to maximize every
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other area of your financial life now if
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you're considering canceling possibly
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you're against hard times in your saying
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I don't really know how I'm gonna make
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those premiums this year or maybe you've
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had a life change where you're not sure
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how you're gonna pay premiums in the
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future either what I want to let you
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know is that there are so many other
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options that don't include cancelling a
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policy so here's the top three reasons
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first if you cancel whole life insurance
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policy you cannot resurrect it or
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reinstate it there's no reinstatement
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rights and you can't change your mind
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and go back and say hey no no no I
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really did want those death benefits
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instead it's gone forever
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you've surrendered your right to the
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death benefit by giving up the policy
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there's no going back now the second
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reason not to cancel is that if you did
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change your mind in the future and
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wanted another whole life insurance
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policy or any life insurance product
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you're gonna pay increased rates just
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for the simple fact that you're older
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now you're older age is closer to the
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end of your lifetime and because the
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actuarial tables you are going to be
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paying into that policy for a shorter
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period of time and the cost will
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increase so you'd have a more expensive
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policy and it's possible that if you
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face any health concerns
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you'd have underwriting challenges that
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might additionally increase your premium
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or even make you uninsurable now the
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third reason not to cancel your whole
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life insurance policy is that whole life
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ages like fine wine now it's because of
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the compound growth inside of the policy
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compound growth if you remember the
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compound growth curve is exponential in
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the early years you have this running
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start that takes a while to get going
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but over time that growth speeds up so
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that compound growth inside the policy
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is gonna have the most benefit the
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longer you have the policy in force now
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instead of cancelling there's so many
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other options available to you and this
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is kind of like a bonus fourth reason
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why you shouldn't cancel your policy
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because instead of just giving up and
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saying I need to walk away from this
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policy and surrender it completely
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altogether you have so many other
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options whole life insurance has a lot
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of flexibility built in just for these
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exact life situations because they
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realize life happens we understand that
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and because life happens we want to have
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something that is going to be flexible
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with you now here's a few options for
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paying your premiums if you can't come
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up with the dollars out of pocket first
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would be reducing to the minimum payment
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now a properly designed whole life
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insurance policy is going to have base
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premium and paid app additions and
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possibly additional riders and you can
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look at pain only the minimum now this
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is different from paying a flexible
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premium as with a Index or universal
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life policy this is instead a flexible
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payment option
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meaning here's my full premium including
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all of these different types of premium
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and I'm going to reduce just to the
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minimum required which is usually your
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base premium plus a little bit a small
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portion of your paid up additions writer
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another option would be to pay from
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policy values now if you have sufficient
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dividends you can surrender the dividend
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to pay the premium or you can surrender
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cash value to pay the premium so those
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are two additional options that would
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further extend the life of your policy
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or get you through a rough patch so you
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could pick up paying the premiums later
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in the future
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you also could take a policy loan now
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remember that guaranteed loan provision
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that allows you to access that cash
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value says that you can use that for
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whatever you choose even if it's paying
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premiums on that exact same policy so
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you can use a policy loan which is gonna
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put a lien against the current cash
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value to pay your premiums yes that's
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going to continue to increase and accrue
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interest you can choose to pay it off
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when your cash flow situation changes or
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not as long as it doesn't grow so large
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that it overtakes the policy which would
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then collapse the policy you can also
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reduce pay up now what this means is
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that you're using the cash value to
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purchase the amount of death benefit
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that is completely paid up with no
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further premium required reduced paying
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up a policy would mean that you will no
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longer have premiums due out of pocket
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the death benefit would decrease and
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your cash value would stay the same now
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your cash value then and your dividend
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growth would slow down for a short time
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and then would pick up again as time
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goes on this is an option that would
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reduce your death benefit but allow you
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to keep the same policy in force
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you also could do a 1035 exchange for a
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new policy or there's sometimes an
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option to use a life settlement and sell
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the policy now you have so many options
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besides canceling now what I really want
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you to think about is that whole life
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insurance is a long term wealth creation
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tool and it is designed to help you even
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through short term challenges so don't
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let a short term challenge wipe out your
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long term vision of what you want to
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create in your financial life that's why
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you should not cancel a whole life
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insurance policy hey I hope you liked
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this video if you did click the link in
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the description box below for more
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information and don't forget to like
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