Advice, thoughts, insights on life insurance policy parents took out on me...
I am linking to my journal which gives more background on me.
I posted this entry as my last one but want to get more eyes on it.
Quick info- Single, 47
So here is the info. Above you read that I remembered a life insurance policy that my parents took out of me when I was younger. I had no details but it could be the solution to my $1302 tax bill this year. Made some calls and this is what I know now:
1. Its an adjustable life insurance policy beginning 2-1-1989. Premiums are $132/year. 30 years=$3960 paid into it. This is a 50,000 policy. My parent still pay $11 a month but the premiums are actually higher at around $13/month and they take that from the cash value.
2. Current cash value is $2915
3. Max cash value will be in 5-6 years at $3164 and then go down in value, significantly dropping off at age 61 and no cash value at 65.
a. I can surrender the policy. Pay surrender fee. Pay my current tax rate in taxes which is 22%. Roughly $600. Cash in hand $2100 ish. Mom stops paying premiums. $1302 for taxes. $600-700 for NOLA. Any extra to savings.
b. Borrow money up to amount of premiums paid into it minus any dividends and fees which should cover the taxes owed and a little extra for my NOLA trip. I can pay it back but I don't have to, it will just deduct from the death benefits. Policy remains open with reduced death benefits. Premiums still being paid.
c. Roll the entire thing over into another type of higher interest account. Me having to borrow money from parents for taxes.
d. do nothing with it
5. Through work I have a 95,000 life insurance policy. I can retire in 6 ish years. I can convert this policy into an individual policy with no medical exam when I leave my job. I also have currently 22,500 accidental death and dismemberment that the work provides. I have a voluntary 125, 000 ADD policy. ADD policies terminate when I leave. Currently covered at 239,500. I have no dependents and that covers all debt and mortgage.
6. I called my mom and she is okay with me cashing it out since it's my policy but she just wants to make sure I have life insurance when I retire and that it could likely be really pricey due to my age at retirement (53).
I haven't made a decision. I know i *need* that money for taxes. I feel kinda guilty about using it. I feel guilty about parents paying on it still.
7. This would put me ahead financially about 8 months to my goals. A great kickstarter and afford me NOT to have to have a big tax bill next year because I can reduce my allowances/deductions.
Any insights? Advice? Things I need to consider and/or am overlooking?