25 Jun 2020
The surrender value is nett positive after factoring in the total premiums paid. I am aged 42 and a homemaker. I'm considering if I should surrender my existing policy to switch to either 1) term policy with critical illness rider or 2) limited pay whole life policy with critical illness rider.
I also own whole life (WL) policies with premium terms to 85. U have to understand how your policy work. My WL now provides me with 4-5% compounded returns (longer than yours) and I still continue to pay premiums with the good returns, tho I dun need the insurance coverage anymore. I have the following choices:
Convert it to paid up, ie stop paying premiums but still enjoy same insurance coverage.
Convert it into an annuity plan, ie stop paying premiums but get regular payouts from it.
Surrender and cashout, ie terminate.
I do not want to do any of the above cos the returns will be lower.
So I suggest u talk to your insurer/agent what options are available for your policy. It is not worth to convert or switch to term insurance (your premiums down the drain if nothing happens).
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Is the primary purpose for your whole life plan for death or critical illness coverage?
For death: For most people, their liabilities taper down and end close to retirement. You may want to consider a term plan for more bang for your buck death coverage. However this may change if your primary concern is leaving behind a bequest for the next generation.
For Critical Illness: If you initial purpose of getting a whole life plan was to ensure that you have substianal coverage for whole of life, I think getting a term plan till retirement age defeats your initial purpose.
A limited pay whole life policy may allow you to reduce financial burden in old age if that is your primary concern. However please ensure the following:
Your health allows you to switch to a new policy.
Your current cashflow allows you to switch to a plan with potentially higher premium.
You are able to continue servicing this premium consistently.
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Perhaps you could request for a reduced paid up cover;
no longer pay any premiums and keep your co...
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