Is it time to cash out your life insurance?
This might be the ideal time to cash it out and go on that exotic overseas trip you’ve dreamed of for years.
However, Craig Baker, CEO of MiWayLife, cautions against jumping into this decision.
“The fact that your kids have flown the nest does not necessarily mean that you are no longer financially responsible for them,” said Baker.
“It would depend to what level you would still be required to provide financial support, for example paying study fees for grandchildren, helping with car repayments, bonds, rent, and other monthly expenses,” he added.
According to Baker, you need to ask yourself whether they are really off your hands, or whether they are just out of the house.
He offered this basic checklist before making your decision:
- You should take your own life expectancy into account. You should look at how much you have saved versus what you still need to support yourself (and your spouse) for the full length of your life (or lives).
- Should something happen, you wouldn’t want to become a burden on your children. Nowadays many young families are caught in the “sandwich generation”, where they are responsible for both their parents and their own children. They will have a hard enough time without having to take care of their parents.
- Many life insurance policies don’t have cash value options and there may be nothing to cash out. There may simply be a monthly payment that you can re-direct to savings or use for consumption. Therefore, check your policy and whether your expectation of getting something out is in fact correct.
- Also keep in mind that, at a more advanced age, you may not be able to get life cover again or you may not get cover under the same terms as you current policy. In other words, make sure you can go without it if you decide to cash it out.
Baker advised, “The long and short of it is that there are a number of considerations which you should go through before you make this decision, and once you have done the analysis then you can make the call.”
If nothing mentioned in the above checklist prevents you from cashing out your life insurance, then it may be time for you to consider planning that trip overseas.