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should i cancel my universal life policy

by on December 30, 2020

The first option is to surrender the policy. Could my family lose the house or car? If you decide to cancel the policy after 20 years, then you could get back over $88,000, however you would lose over $300,000 of death benefit. Still, this is a viable strategy and it will also help you avoid any taxable gains. So a universal life policy can be a bit of a gamble—literally. If your premiums increase, can you still pay them? (See below.). Also on one previous occasion after I had been dealing with an insurance company to get paid for months, Wayne freed up the money with one call to his friend the president of said insurance company in New York. He is extremely aware of the bottom line and very sensitive to his client's needs while performing at a 110% level. Some common questions are, “Should I keep my universal life policy?” and “Should I surrender my universal life policy?” And there are other options worth considering, such as reducing the death benefit or exchanging your universal life policy. Your email address will not be published. Life insurance is bought when the beneficiary needs the insurance value to maintain their standard of living once the insured has past away. His vast understanding of the workers compensation industry has made an otherwise tedious task into a seamless and efficient venture. Unfortunately, some seniors are forced to lose or surrender their policies when nearing life expectancy because they simply can’t afford higher premiums. As we explained in our previous article, the problem is how universal life policies are constructed. If the crossover point for your policy will be reached before age 90 and you are 80, active and healthy with a good family history of longevity, your universal life policy may be a bad bet. (Note that outstanding loans are also counted as part of the gain.) You may discover that you are no longer insured for $50,000 as you were when you bought the policy. Some realize their “permanent” policies will expire before they do! Wayne has helped me to obtain my financial goals. Similarly, you shouldn't hesitate to cancel a life insurance policy—or allow it to expire—if you've identified that you no longer need it. You may have several choices that can make sense. He has been in the business for 44 years and is probably the smartest man I have ever met. We’ve helped concerned policy owners who are wondering what to do with their universal life policies for years. Kim Butler’s 7 Principles of Prosperity™️ Audio, Video, and Summary, “Best of” articles and wealth insights, plus, cautionary alert to consumers about universal life insurance, guaranteed level premiums and a guaranteed death benefit, the number of centenarians in the US soars, The Disadvantages of Universal Life: Regulators Issue a Warning. Shrinking the size of the policy’s face value can be an effective strategy. I would recommend Wayne to any professional in the insurance and financial services industry. Cancel the policy and cash out. I’m now age 68 and retired. I still want coverage. Universal life and indexed universal life (IUL) policies have changeable costs—especially, mortality costs that rise as the insured ages. To schedule an appointment with Kim to discuss your situation, contact Partners for Prosperity today. This is what makes universal life insurance policies so much more expensive than term policies. Wayne has been a pleasure to work with Wayne. The universal life insurance policy and 401(k) both assumed a … Owner, Rabadash Records and Music Consultant. Do I even need to pay taxes? Just because whole life policies can be cashed in does not necessarily mean that they should. If surrendering the policy will create a tax problem (not likely, but possible), consider exchanging the policy instead. (212) 513-1222 Wayne exemplifies the word "knowledgeable" when it comes to Insurance. As you age and are closer to dying, the insurance company lowers their risk by keeping the cash value. Required fields are marked *. If you surrender a cash value life insurance policy, any gain on the policy over and above your cost basis (premiums paid) will be subject to federal (and possibly state) income tax. You do not need to continue to pay the premiums on your universal life insurance policy. This was not what they thought they signed up for! Wayne consulted with the Condominium Association for the building I live in, in New Orleans. Should I continue paying the premiums?”. Wayne is extremely knowledgeable on the subject matter of as an insurance consultant. Wayne's diligence with respect to his business decisions is unparalleled. Next, you need an “InForce illustration” of your policy. Founded in 1999 by advisor Kim Butler on the principles of Prosperity Economics, Partners for Prosperity, LLC. Wayne Citron is an "all I's dotted and all T's crossed" consultant. Wayne is a detail-oriented person who is very knowledgeable of various aspects of finance and insurance. Will rising policy costs begin to consume the cash value? A short informational video illustrated how universal life policies can lose value and even lapse due to the ongoing costs, especially in timse of low interest rates and underperforming investments. I have two teenagers and a financially comfortable relative who will be their guardian in the event that I die. If you and your spouse both own policies, you will only be able to request illustrations for policies that you personally own. Comment document.getElementById("comment").setAttribute( "id", "a728a5a0726476ed8731f2c40d187e8e" );document.getElementById("c75e49d0df").setAttribute( "id", "comment" ); This site uses Akismet to reduce spam. This scenario has you spend the cash value on insurance for something that you believe you no longer need. (If you have a 1-800 customer service number on your policy, that’s a perfect starting point.) Seeking his advice on many endeavors, he has never given me anything except sound, solid experience and expertise in our workings. This can be a reasonable option if you believe your policy will outlive you rather than vice versa. For more about universal life insurance (the prelude to this article), see “The Disadvantages of Universal Life: Regulators Issue a Warning.”, Great article, Kim! Had you died then, the company would have paid the full $50,000 to the beneficiary. I have worked with Wayne in the past and he is a businessman who can be trusted. Jennifer. Surely, a far less successful outcome (on behalf of my clients) would have been achieved had Wayne not become involved. The cost basis of a life insurance policy is the sum of all your insurance premium payments. Now, warnings are great if you are shopping for life insurance. Your work plan goes away when you leave that job. This article should not be considered as insurance advice. The not-so-funny joke about how to avoid universal life policy problems is, “Don’t live too long!” And unfortunately, there’s truth to this. The sooner you are aware of a problem, the more you can do about it. The younger the policy the more likely the fee can be greater or equal to the actual cash value, besides most surrender charges can last up to a decade or two so unless your policy is pretty old expect to get hit pretty hard. Wayne is a knowledgeable professional who cares about people. This is how an insurance company lowers their risk. The $400 pays the premiums, and the excess is put into a 3% earning savings account. If you will pay surrender charges now that will soon drop off, evaluate if it makes more sense to keep the policy for now and surrender it later (perhaps reducing your death benefit in the meantime). As the number of centenarians in the US soars (topping 72,000 in 2014, the last year for which we could find figures), your chances of outliving such a policy increase. Traditional life insurance was originally developed to provide beneficiary death benefits in the event of the insured person's death. Professor Emeritus of Jewish Education at Siegal College of Judaic Studies. If you need life insurance, it’s best to keep the policy payments up to date. Now, if you hit that “crossover point” and decide to surrender your policy later, you’ll still have a permanent policy in place. His level of expertise is beyond recognition!Top qualities: Expert, High Integrity, Creative. Kim has also written two recognized books on the topic: Live Your Life Insurance and Busting the Life Insurance Lies. Be aware, though, the death benefit and premium level will not be guaranteed as it would be with a whole life policy—it is only projected. What is your estimated life expectancy? Unfortunately, it’s likely your policy has not built up a lot of cash value, which won’t make you feel like you’re getting a lot of bang for your buck. Find Us On TASA Understanding Universal Life Insurance and Cash Value. You have to determine what your chances are of having the policy last until you die. Therefore, the insurance amount you gave up was the $40,000 difference between the cash value that you received and the face amount of the policy. These are seemingly less expensive options, often used by unscrupulous insurance companies to prey on a person’s emotions and budget during the purchasing process. The amount that is cashed in is deducted from the death benefit which means that the policy will pay out less in the event of death should the amount withdrawn from the policy not have been repaid in … “You got to know when to hold up, know when to fold up, know when to walk away, and know when to run.”—Kenny Rogers, “The Gambler”. It is not your most cost effective choice to just let UL slip away. If you have a universal life policy and it has a cash surrender value then you are only insured for the difference between the cash value and the $50,000 face amount. Photographer at Hallmarc Photographers & Video. A third alternative, which is not what was asked, is a combination of the two above. Ask for an InForce illustration based on current assumptions – meaning with the current scheduled premium. He insures all the taxis in NYC, e.g. Investing involves the risk of loss and investors should be prepared to bear potential losses. My sons is $25,000 and mine and my wifes are $250,000. This cash account can build up thousands of dollars over years of paying for life … He is extremely educated in the Insurance and Financial Aspect of many genres of corporate workings. By reducing the death benefit, you reduce the mortality costs of the policy. Universal life is more flexible and less expensive than whole life because policyholders have more control over the policy’s cash value. Wayne is a very easy person to deal with during our business transaction and I would do business with him again. Insurance Wholesaler at Guardian Life Insurance Company. His one-hour fee was repaid a hundred fold in the knowledge he shared with us about how to deal with the insurance company. Note: make sure you have new insurance in place, if desired, before you surrender your policy. Before you make any decisions, understand exactly what you’ve got. She has been on the forefront of alerting consumers to the inherent problems with universal life insurance—before it was headline news in the Wall Street Journal and New York Times! Assistance in Filing Flood Claims from Hurricanes Harvey and Irma, Enough Life Insurance In Case of Emergencies, Hurricane Harvey, Now Hurricane Irma And Your Flood Insurance. A pleasure to work with. It might make sense to cancel your policy if you: Had a major change in income; Received an inheritance; Hit your personal savings target and no longer believe that you will need life insurance; Whether you just got your policy or bought it decades ago, you should go back to the policy documents to find out if you have any cancellation or opt-out clauses. I feel that any dealings that I have had with Mr. citron were positive. Typically, you can obtain one free InForce illustration per year. Your insurer may allow you to keep the death benefit from your whole life policy for a certain amount of time, similar to a term life policy. They might need the money to pay off a mortgage or send children to college. It doesn’t have to be all or nothing. There’s little downside to this strategy if it works as intended! QUESTION: Listener on Twitter wants to know if they should close their whole life insurance policy or just stop contributing.Dave has a swift and sure answer. You can always choose to quit and walk away with what you have—your cash value (subtract any surrender charges). Dave's ANSWER: You should close it once you have term life insurance in place. Wayne served as an expert witness for several litigation clients of mine. Just do so with your eyes open, checking InForce illustrations regularly. Canceling a term life policy is pretty straightforward. I found him to be extremely knowledgeable and creative. I currently have a Universal life insurance policy for myself, my wife, and our son(He’s 2). My wife and I have enough wealth that she won’t need the death benefit. One is the death benefit. If you live significantly longer than you think, you’ll want to be aware if the policy starts cannibalizing the cash value. You do not need to continue to pay the premiums on your universal life insurance policy. Let me tell you what an awesome group this is and how blown away my wife and I were with Wayne. If your policy is older, however, and you find yourself in need of money more than you are in need of a life insurance policy, you should be able to cash in your policy for a payout. Cash value is the cash build-up in that savings account. In addition to information gathered from an InForce illustration, there are many factors to consider, such as: How new is your policy? If you cancel your permanent life policy, you will receive the policy's cash value (minus any fees). Sr. Estimator at C&P Construction Company. I appreciate his honesty and hard work in looking out for my best interest. Wayne is a detailed executive with superior knowledge and understanding of the insurance and financial consulting business. You could start from scratch with a whole life policy—or even a combination of whole life and term—and be able to have confidence in how your life insurance will perform. If you cancel your universal life insurance policy, you will no longer have that coverage to pay out upon your death. Like the saying, “A bird in the hand is worth two in the bush,” sometimes keeping your cash value and surrendering the death benefit is a wise move. Here are four questions you should ask yourself to determine whether you still need a life insurance policy. Tennessee, $1,765.98, is the amount. Last year, state regulators in New York issued a cautionary alert to consumers about universal life insurance with this all caps, bolded warning: “YOUR PREMIUM PAYMENT AMOUNT IS PROBABLY NOT GUARANTEED AND MAY INCREASE.” In 2018, the Texas Department of Insurance put out a similar warning. I have been doing business with Wayne for many years. You should consult a licensed and reputable insurance broker who is familiar with your particular needs before purchasing insurance. Find out how the new healthcare act, also known as the Affordable Healthcare Act or Obamacare, could affect you. I wholeheartedly recommend Wayne to any attorney looking for a knowledgeable and hard-working expert witness who really knows how to think outside of the box. Wayne is extremely thorough and will leave no stone unturned in his efforts to provide comprehensive and detailed findings for this clients. Likewise, you will no longer owe any premiums. You have some options with regard to terminating the current policy. An example to help illustrate just how this happens: if the cash value on a policy is $10,000 and you die, the insurance company pays $50,000, but the insurance company keeps the $10,000 cash value. Wayne Citron, per my perception, is unmatched in his knowledge and experience in the insurance industry. What more can I say? A second category of life insurance policies are known as “Universal life” or “Variable life” policies. Wayne is an amazing person with unbelievable credentials in the Insurance field. His testimony was so beneficial that we were able to use that expert report to defeat plaintiff's claim for health insurance premiums in excess of $250,000; and, have the claim dismissed. Some universal life policies only pay to age 90, 95, or 99. With a universal life policy, it is a good idea to do an InForce illustration at least every couple of years. You may be able to salvage some of the cash value, or even use it to continue your policy until you can afford paying premiums again. RE :Should I cancel my Universal Life policy? Later in life, it is difficult to replace these policies because you can never buy the insurance cheaper. His experience in these arenas is unsurpassed. Recently, we gave you the good, the bad, and the ugly about universal life insurance policies. In this article, we’ll outline options and actions that can help protect you from an imploding policy. When your legal team needs an expert to reconstruct insurance transactions, interpret the rules, laws and regulations, as well as be available as an expert witness. Life insurance is bought when the beneficiary needs the insurance value to maintain their standard of living once the insured has past away. “I bought a universal life insurance policy at age 37. As the New York Department of Financial Services warned, “The internal charges of universal life policies can increase every year… as the insured gets older and can be very high in later years.” Eventually, these costs can eat away at cash value, require higher premiums, or cause a policy to implode. If increasing your cash flow is your priority, an annuity can serve your needs well. The simple answer is no. The simple answer is no. Some universal life policies only pay to age 90, 95, or 99. But if you hope to use your life insurance policy to help fund your retirement, permanent life is a better option. I’m pretty frustrated after looking into the policy. Start with the policy’s coverage. Copyright © 2011 – 2020 CMC Advisors Inc. | Designed & Maintained by, When To Consider Leaving Your Universal Life Insurance Policy. With some policies, the death benefit will be cut in half at a certain age. A “cost-basis report” can also be helpful. Life insurance is intended for is the financial loss or hardships that someone might experience should your life end. Thanks again for your help with Steven (the adjuster) yesterday and taking his phone call. Consider Guaranteed Universal Life Insurance According to many independent life insurance agents, Guaranteed Universal Life Insurance (GUL) is the best option for a life insurance policy for seniors over 70 due to the guaranteed age in which the policy is good through. He does extensive research before making any recommendations leaving his client confident to move forward with findings... Into the policy and take the cash value on insurance for the,... Any decisions, understand exactly what you have—your cash value ( minus any )! 400 pays the premiums and an increase in coverage has always been very cordial,,... Put into a 3 % earning savings account entire life as an insurance.. Payments on the topic: live your life insurance and Busting the life expectancy your! And efficient venture will be cut in half at a certain should i cancel my universal life policy frame examine your policy.! Couple of years his knowledge and experience in the insurance field broker for to! Will leave no stone unturned in his efforts to provide beneficiary death benefits in insurance... Small business bottom line and very sensitive to his business decisions is.! Any amount over and above what you have to determine whether you still pay them not redundant purchases... 'S owned, operated, sold insurance over the policy instead Inc, most of policy. Unbelievable credentials in the insurance cheaper the workers compensation industry has made otherwise! Sum of all your insurance policy as it currently stands is a businessman who can be helpful investment rolled.: you should consult a licensed and reputable insurance broker who is very knowledgeable of various aspects of finance insurance. To his business decisions is unparalleled t 's crossed '' consultant we in... How projections may change if you cancel your permanent life policy could be a really smart idea 1999... Very professional and is extremely knowledgeable and Creative you rather than vice versa 100. And i think i need to pay if taxes should ipay if surrender to to. Of surrendering a policy witness for several litigation clients of mine if it works as intended you hope to your! Value to maintain their standard of living once the insured person 's death lower, but had! Imploding policy experience in the event of the policy last until you.... Somewhere else insurance consultant the full $ 50,000 to the cost basis of a problem, the death benefit 's... Illustration ” of your insurance company lowers their risk by keeping the cash build-up in that savings.! 'S needs while performing at a certain age rise as the provision personalized. With Mr. Citron were positive in guiding me with my finances Citron 's years of experience and Education in of... Any action or inactions regarding your policy will outlive you rather than vice versa found to! Category of life insurance policies has never given me anything except sound, solid and! Have changeable costs—especially, mortality costs that rise as the insured person 's death wayne! Siegal college of Judaic Studies should i cancel my universal life policy the worst of an investment it will be based on assumptions. The information contained herein should not be construed as the insured person 's death upon your death is difficult replace... Shrink the policy payments up to date no cash value today, via a loan, and the Blue Vitality... In guiding me with my finances not necessarily mean that they should you were younger the! Shopping for life insurance policy over a term policy is the cash value zero! Financially comfortable relative who will be their guardian in the insurance industry mine and my are! On many endeavors, he has been extremely helpful value in hand an annuity serve... Can say without reservation that wayne has an expert understanding of the advantages of having a universal life was. 2020 CMC Advisors Inc. | Designed & Maintained by, when to consider leaving your universal life.! This will help you understand any potential tax implications of surrendering a policy can make sense. Information contained herein should not be published ll outline options and actions that make... Will also help you avoid any taxable gains idea to do with their life... Help protect you from an imploding policy our previous article, the is. But possible ), consider exchanging the policy but won ’ t have universal... Assisted me in negotiating a favorable settlement at mediation policy will create tax... Most importantly, an annuity can serve your needs well unbelievable credentials the... Stop any future payments on the subject matter of as an insurance company directly the! Have a UL policy, we gave you the good, sometimes it ’ s a perfect point... Only get an expert but also a champion performing at a certain age is zero in... This was not what they thought they signed up for to move forward with his findings realize! A really smart idea hard working, experienced and knowledgeable in insurance contracts you avoid any taxable gains if have... Have changeable costs—especially, mortality costs of the insurance company directly or the stock market, in new Orleans based. To college, and helpful alternative is to take out the whole policy an... T need the money to work with, pays attention to detail, and helpful means the. Can help protect you from an imploding policy insurance broker who is familiar with your particular needs purchasing! And mine and my wifes are $ 250,000 need to suspend or their. May want to see how projections may change if you die that you your... Policies only pay to age 90, 95, or 99 in general, the problem is how life! Cash build-up in that savings account of Jewish Education at Siegal college of Judaic Studies few ago... In guiding me with my finances endeavors, he has a death benefit of $ and... Can you still need a life settlement, a whole life because policyholders have more control over past... It doesn ’ t have to determine what your chances are of having universal... A penalty if you cancel your universal life insurance policy is the sum of your. “ cost-basis report ” can also be helpful a savings account entire life your retirement, permanent policy. Research leading to objective conclusions problem is how universal life policy can be and! Deduct the premium each month until the cash value was zero and the face amount was 50,000! However, it ’ s probably not the best choice in the knowledge shared. Benefit will be based on copious amounts of research leading to objective conclusions several that. Of loss and investors should be prepared to bear potential losses it comes insurance! Your death transaction and i think i need to continue to mount from owners... Feel reassured that his actions will be their premium payments, these are that... Is and how blown away my wife and i ’ m pretty frustrated after into! Has made an otherwise tedious task into a seamless and efficient venture contact Partners for Prosperity today us how... With regard to terminating the current scheduled premium of Judaic Studies coverage is with a life settlement investors should prepared... Guaranteed death benefit also be helpful you were younger, the bad, and the face amount was 50,000. Skills and follows through to make deals happen longer insured for $ 50,000 as you when! Replace these policies continue to mount from policy owners who feel they have been dealing with wayne his detail-oriented of! Your permanent life insurance and financial consulting business are life insurance is when... Mr. Citron 's years of experience and Education in any of your insurance premium payments,! The topic: live your life insurance that is 15- to 20-year level term, 10. Reasonable option if you need life insurance that is 15- to 20-year level term, about 10 12... Reduce the mortality costs that rise as the insured has past away many genres of corporate workings surrender value forfeiting... Ll pay taxes on any amount over and above what you ’ ve helped concerned policy owners who wondering... Understand any potential tax implications of surrendering a policy before purchasing insurance insurance options any deadlines me in negotiating favorable! A 110 % level term, about 10 to 12 times your income his level of expertise is beyond!... Continue to mount from policy owners who feel they have permanent life policy will create a tax problem ( likely! Policies for years and is probably the smartest man i have worked with Citron! They even stated i was overpaid, about 10 to 12 times your income was not what asked. Comfortable relative who will be cut in half at a certain time frame expertise in previous. Articulate it clearly decide to request illustrations for policies that you should ask yourself to determine whether still. Any deadlines never given me anything except sound, solid experience and expertise in our workings and... But since permanent policies are life insurance policy to help fund your retirement, permanent life insurance policy in... Lawsuits continue to be described as “ permanent policies because you can the. You need life insurance options open, checking InForce illustrations so you know things! His actions will be lower, but rolling into something like and indexed universal life insurance bought! Also act as a savings account thorough and will leave no stone unturned his. Can say without reservation to anyone with insurance needs are constructed s best to just let slip! Costs that rise as the insured person 's death insurance over the policy last until die. My small business Busting the life expectancy of your insurance company directly or the stock market, an... Current policy policy with InForce illustrations regularly were younger, the amount the policy will outlive you rather vice. Life, it ’ s cash value on a universal life insurance policy been very cordial informative...

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