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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29558
Experience:  Taxes, Immigration, Labor Relations
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I have a "universal" life insurance policy with a

Customer Question

I have a "universal" life insurance policy with a face amount of $150,000 that has been in effect for 30 years. The company has informed me that my monthly premiums will increase from $448 to $1190 per month if I want the policy to be in effect until age 100. My goal is for my wife to receive $150,000 upon my death. The cash value of the policy is currently about $75. What do you recommend that I do? Pay this high premium? Reduce the time it's in effect to a lower age? (Age 90 would lower the premium to $1094) Switch companies?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
I would simply compare total amount you pay for that policy plus expected interest income with the policy's a value of $150,000So you will know when you should die for your spouse to have larger benefits.The answer might be obvious - you need to die immediately after you sign for that policy.However there will be another age at which your investments into the policy and expected payoff will be equal - so if you die after that age - there is no reason for having that policy.Then - you need to evaluate your health and verify how likely you will pass away before that age.
Customer: replied 1 year ago.
I would appreciate a more appropriate response to my question -- without the cynicism. Should I continue with this policy at the increased rates? Should I switch to another company? Please consider that the present value of the policy is virtually nothing. I expect to live another 10 to 15 years.
Expert:  Lev replied 1 year ago.
If you are 60 now and expect to live another 10 to 15 years - then - you might want to look for 15-20 years policy.If realistically - you do not expect to live until age 100 - what is the reason to have such policy and pay higher premiums?If you will pay $1190 per month - that is $14280 per year - and if you simply put these money aside - in 10 years with additional interest - you will have more than the policy's face value.
Expert:  Lev replied 1 year ago.
if you REALISTICALLY think to live at least another 10 years - that policy is worthless.There is be some financial benefits from THAT policy - if you die before 10 years.For instance if you die in 5 years - the policy will pay $150k,but without policy - your saving would be only a half of that amount.So from financial (or investment prospective) - there is no much reason of having the policy...On the other hand - you might pay larger price to cover unexpected expenses that might put your wife under financial pressure.So - that question would not be related to investment evaluation of that or another policy - but whether you wife will be able to continue her current life style if you die and if not - would that $150k payoff be a real help in such situation?If you answer yes - then - you agree to pay higher price for protection - and are not looking into that policy as your investment...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.