My only income is my SS plus 2 small monthly employer retirement pensions.
I have 3 whole life polices with a total current death benefit of $10,000.
There is a total of $7500 in loans which would have to be re-paid to bring the polices back to full value.
The current cash value for the policies is $3175.
My question is should I surrender the policies and add the cash value to my IRA?
I should add that I was in the military and the VA will handle my burial expense.
Total Comments: 4
Posted: Fri Jun 17, 2011 03:15 am Post Subject:
If you have no EARNED INCOME, you cannot make any contribution to an IRA. Life insurance cash value is not "qualified" money and cannot be "rolled over" to an IRA like 401(k) or 403(b) money can.
If you need the money, you need the money, and you can cash out your life insurance and do most anything with the money.
Concerning the VA burial benefit, it does not cover the cost of funeral services or mortuary expense. It merely provides a burial plot in a Veteran's Cemetery and a grave marker (in a Veteran's Cemetery or any other cemetery). Someone will still need to pay for the mortuary and funeral.
Perhaps you might want to consider a Section 1035 exchange from your existing life policies into a funeral expense contract to cover those other expenses. Those contracts are sold by mortuaries or cemeteries (other than a Veteran's Cemetery).
Posted: Fri Jun 17, 2011 12:01 pm Post Subject: Surrender Policies
Thank you for the information. It appears I was given incorrect information concerning the military burial allowance.
Posted: Fri Jun 17, 2011 04:02 pm Post Subject:
You can find the information you are concerned about at
http://www.cem.va.gov/cem/bbene/benvba.asp (click on the link to "Burial Allowance")
Posted: Tue Dec 05, 2017 06:01 pm Post Subject: CASH OUT A POLICY
I have a whole life policy for $100,000 that I took out over twenty years ago. I have about $36,000 in cash value for the policy now. I am considering surrendering the whole life policy collecting the cash ( $36,000 ) and purchasing a term policy in its place. I am currently 60 years old and still working. What should I do.