My father has a whole life policy which he has been paying $475.28 since 1998. face value is $6,499.00 what should I do?
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Asked June 9, 2016
Without policy specific details, listing all available options would be impossible. In general, whole life insurance is a type of insurance that pays beneficiaries a predetermined death benefit upon the passing of the insured while also accumulating a cash, or face, value through a unique savings component. Depending on contract specific options, or riders, chosen at the time of the original policy, borrowing against or taking out some or all of the cash value while retaining the death benefit is usually a key characteristic of whole life contracts.
One of your most basic options to do with your father's whole life insurance policy is continuing to pay the premiums while allowing the cash value to continue building. Doing this protects what your father likely saw as part of your inheritance (the death benefit) and allows for a safety net in case there comes a time when he can no longer pay the premium out of pocket and needs to use some of the cash value to pay the premium.
The next most obvious option would be to stop paying the premiums and withdraw the cash value. This would end the death benefit and return a portion of the premiums which were paid over the years minus any contract specific fees. The upside to this option is saving the yearly premium of $475.28 and a small influx of about $6,000 cash; however, the downside is the loss of what would likely be a much larger death benefit payout which your father presumably wanted you to have.
Other options are specific to the selected riders your father chose when signing the original contract in 1998. If you have a copy of his contract, you can review it to see if it lists additional options. To obtain a copy of a lost contract, your father can call the issuing company and request one after providing some identifying information.
Answered June 10, 2016 by GWGLife