by Florence1945 » Thu Apr 30, 2015 11:43 pm
Husband has $115K Thrivent / Horizon Life policy 3/28/1988. Surrender value is $31,615.91 w/NO surrender charge and Taxable gain $4,270.25. Note: Current interest rate: 4.50%
There is Partial Surrender of $30,178.04 w/NO surrender charge. .
Also see a Loan Amount Available: $29,273.99.
I don't want to cash the whole policy in because I will be left with no insurance to protect me (on hubby.) He doesn't seem to think we need or important.
What is my best option. We had appointment w/Ins Rep. but they just canceled today and re-scheduled for 5/21/15 and lady that called did not know about surrenders or cash. Any suggestions?
We need estimate of $10-12K now. IF we partial surrender can we still keep full life value of $115K? and IF we take loan do we have to pay now, or is it deducted from Value of life?
_________________
Register Now to have your Insurance queries solved.
There is Partial Surrender of $30,178.04 w/NO surrender charge. .
Also see a Loan Amount Available: $29,273.99.
I don't want to cash the whole policy in because I will be left with no insurance to protect me (on hubby.) He doesn't seem to think we need or important.
What is my best option. We had appointment w/Ins Rep. but they just canceled today and re-scheduled for 5/21/15 and lady that called did not know about surrenders or cash. Any suggestions?
We need estimate of $10-12K now. IF we partial surrender can we still keep full life value of $115K? and IF we take loan do we have to pay now, or is it deducted from Value of life?
_________________
Register Now to have your Insurance queries solved.
Posted: Tue May 05, 2015 04:35 am Post Subject:
IF we partial surrender can we still keep full life value of $115K? and IF we take loan do we have to pay now, or is it deducted from Value of life?
If the policy is truly Whole Life, there is probably NOT a partial surrender option, but you can borrow money from the insurance company using the policy's cash value as collateral. If the policy is Universal Life ("Flexible Premium Adjustable Life"), then a partial surrender is always possible.
A life insurance loan is not "your money". It is the insurance company's money, and is repaid with interest -- either by you during the life of the insured, or as a deduction from the death benefit after the insured's death. The hazard is not paying the interest as it accrues -- unpaid interest will be added to the loan principal, and then you pay interest on interest, which can lead to a loan amount that exceeds the cash value, at which point the policy dies.
In a UL policy, if you are not entirely concerned about the death benefit, a partial surrender of cash value is preferable to a loan, because you will only reduce the death benefit on a $-for-$ basis, leaving the remaining death benefit intact as long as you pay premiums and have cash value in the policy.
It is not possible, however, to take a partial surrender and maintain the same death benefit amount. In effect, you are taking an "advance payment" of the policy proceeds. But there is no repayment or interest. The only way to restore the original face amount is to apply for and be approved for an increase. If you take a loan and fully repay with interest, then you will have restored the full death benefit. If not, you have received an advance on the death benefit at the time the loan was made.
I doubt that you have a taxable gain in the policy as you describe. Even if you did, you would not pay tax on the gain as long as the policy remains in-force and you don't surrender more than your cost-basis (generally, premiums paid).
You don't need to meet with a representative of the insurer. You can do all that you need to over the phone directly with the insurance company and then submit the signed paperwork needed. Only the policyowner may sign for either a loan or surrender.
Posted: Wed May 06, 2015 01:11 pm Post Subject: Partial Surrender
We finally got hold of our representative. He says, YES, we can partial surrender for $15K and the face value of life policy decreases $ for $ from $115K TO: $100K.
Because the $15K is within our cost basis there are NO tax consequences, NO surrender fees, and NO payments because basically it is our money. NO fees at all.
We had a conference call between us, our Representative, and the Home Office so that they could talk to Paul directly.
They are making the partial surrender of $15K and will be either direct deposit or EFT to our checking account by this Friday.
On 5/21 our rep will still come out to see us, bring illustrations and new revised policy amount of $100K.. Thank you so much for the heads up information. You alleviated much of our fears. Again, Thank You!!!
Add your comment