Can you transfer a whole life insurance policy to another company?
I am unhappy with both the performance and service on a whole life insurance policy that I've had for about 11 years. Do I have any options? I'd never get the same rates now. I was told when sold the policy that dividends could pay the premium after 20 years...doesn't look like that is the case. Also, the cash value is LESS than the actual money i have put into it. Is this normal or do I have a crappy policy?
- Anonymous1 decade agoFavorite Answer
Yes you can transfer the cash value in the whole life policy into another cash value policy (ie Whole Life to Whole Life, Whole life to Universal Life, etc) or into an annuity (such as variable and fixed annuities). Its called the 1035 exchange which you can move the cash value into another life policy or annuity without any taxes due.
But I wouldn't do that anyway unless you are nearing retirement and have nothing saved, then I would move the cash value into variable annuity. If this doesn't fit your description, then I would first check if there are any loans due on the cash value. You want to pay this off before exchanging it or canceling it because this loan will be considered as additional income when you do your taxes.
If there is no loan due, then I would first look around for companies that sells term insurance policies of 20 to 35 year. You should check out Primerica Financial Service. While some people don't like their business opportunity, their service to clients is excellent. They provide a customize, complimentary, and confidential financial needs analysis that can evaluate your current finances and makes recommendations on what you should do next to reach your financial goals. They also can help you create a game plan to get out of debt and also re-define your investments (meaning they can make improvements so that you can get a better performance). Its really a great company to do business with.
When you qualify for term insurance and you accept the policy, you will see your premiums will be significantly lower than what you pay for whole life. I would use the savings and invest it every month. With the cash value in your whole life, I would cancel the life policy and put the cash value into a Roth or Traditional IRA. If you have too much cash value (anything above $4000 if you below the age of 50 or above $5000 is you are age 50 and above), then save the rest and invest it later. If you have a spouse, have the spouse open an IRA too.
I have never sold whole life insurance because of the way they are designed. If they paid out cash value and death benefit, then I would say its an "ok" product. But I would still sell term insurance and keep the savings separate because you can afford the right amount of protection and achieve higher rate of returns in your investments. As your investments grow and as you get older, the need for life insurance declines. Eventually, your investments will grow so large that you don't need life insurance anymore and you become self-insured.Source(s): http://finance1o1.blogspot.com
- KierstenLv 44 years ago
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If the carrier goes bankrupt, the policy gets transferred to another insurance company licensed to do business in your state. It happens ALL THE TIME, companies going out of business and policies being transferred. Yep, that "adjustment" happens, and if the policy is actually not whole life, but a different kind of policy, it's going to start costing every year as the investment returns won't be enough to pay the premium every year. I'd suggest that the policy is not "paid up".
- SarahLv 44 years ago
Sit back and relax my friend. The fact of the matter is that insurance companies do not go bankrupt in the normal sense. They simply get acquired by other insurers. Sounds like your dad may have had a hybrid policy that has an investment component to it. The investment is not doing well and isn't covering the cost of maintaining the policy costs. Hard for me to advise further without seeing the policy etc. But in any case don't be concerned about the solvency of the insurance carrier.
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- 1 decade ago
When you bought the policy you signed paperwork stating that dividens are NEVER guaranteed on ANY policy with ANY company. You should never count on dividends to make the payment for you.
Sounds like you should have bought a 20-year pay policy which would have definitely been paid up in 20-years.
You should talk to a knowlegable agent face to face before you decide to cancel the policy. Find out all your options and make a determination based partly on your current health and life expectancy.
You can not actually transfer it to a different company. You can cash it out and buy something else. That may or may not be wise.
- misty blueLv 61 decade ago
If you are unhappy with your lilfe insurance that you have now. I suggest that you look into other insurance agency and find one that will fit your needs. and I don't think that you can transfer your life insurance policy to another company, but it won't hurt to ask the new insurance agency if you can do that. good luck.
- 1 decade ago
with each policy you have options. first the buy out option you can take all of the money you paid in so far in a lump sum check. or you can buy a reduced term policy that will give you some insurance for a certain amount of time with the premiums you have already paid. or you can buy paid up life insurance which is with the premiums you have already paid buy a paid up policy at a certain value.if you need anymore advice i am an insurance agent and you can email me at email@example.com thanksSource(s): im an agent
- Anonymous1 decade ago
It is possible to move the cash value to a new company and if it is done properly you won't pay tax on the transfer. Contact a Northwestern Mutual or Mass Mutual agent to do this.Source(s): http://www.findlocalinsurance.com
- 1 decade ago
Drop that whole life crap, and buy cheaper term. You will get more coverage for less money, then save the difference and put it into something that preforms better. Which by the way would be anything. Plus if you need the money you don't have to barrow it from the whole life policy, which is usually 6-8%.
- 1 decade ago
There are a number of things you can do. I never really suggest going with a "captive company" like Mass Mutual or Northwestern Mutual because you are only going to see their products and their rates. There are so many companies that offer really good products. You owe it to yourself to take a look at all of your options. Find someone who is independent and has experience in such arrangements. In a whole life policy there is a portion of your premium that will go towards paying your "cost of insurance" and the difference is your cash value that is invested. The portion that is invested is probably earning 4% - 6% annually. Look at doing a 1035 exchange with another carrier. Depending on your age and what the death benefit is you could possibly sell the policy in the secondary market. (Life Settlement) In a Life Settlement you can have little or no cash value and still sell the policy.
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