Whole life insurance policy is a life policy that contains death benefit plus savings. However, even though there's two products build into one, you only get one of the above. If you die, your beneficiary get the death benefit, but not the savings. If you live to age 98, you get the savings, but you are no longer covered.
Base on what you want, you are better off surrendering the policy and putting it into a Roth IRA. I would invest in aggressive growth fund and growth and income fund. Make sure you invest in the same fund family. For example, if you invest with Legg Mason, stick with Legg Mason funds. That way, when your Legg Mason funds accumulate $25,000 in value, you get sales discount.
But first, I would get a 30 year term insurance and see what your annual premium is (its definetly going to be lower than $1200/year, might be as low as $400/year). If you take the term insurance, then you should surrender your whole life policy and put it into your Roth IRA. But only do this if you qualify for term insurance. "Life insurance is not something you buy, its something you have to qualify for."
After you start your IRA, you should invest the difference (between your whole life and term) each month. Investing each month on the same day of the month lowers your avergage cost per share because on some months, price per share may be high, so you get fewer shares to buy. But on other months, price per share maybe low, so you get more shares. This is called Dollar Cost Averaging.
· 1 decade ago