Author Topic: Getting out of two small universal life policies….1035 exchange?  (Read 1208 times)

SailAway

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Getting out of two small universal life policies….1035 exchange?
« on: September 06, 2014, 05:02:42 PM »
So, back when I started this job 8 years ago, dumb face-punchable me was sold two small universal life policies. I've been toying with getting out of them for a while but then I get irritated by the surrender fees and become immobilized and do nothing. Time to stop doing nothing. I have sufficient term insurance for now.

Policy 1
Death benefit 43,285
Annual premium 452.04
Current cash value 1,790

Policy 2
Death benefit 79,392
Annual premium 656.40
Current cash value 2,010.81

So I figured the answer was just to cash them out and take the loss, stop throwing good money after bad. But White Coat Investor mentions a 1035 exchange to preserve losses. http://whitecoatinvestor.com/how-to-dump-your-whole-life-policy/

Too much trouble for such small amounts? What would MMMians do?

arebelspy

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Re: Getting out of two small universal life policies….1035 exchange?
« Reply #1 on: September 08, 2014, 02:49:30 PM »
We can't really say without knowing how much your loss is (or your contributed amount, and we work that number out based on the current cash value).

Run the numbers on what it will save you if you eventually cash it out after it's grown to what you paid in versus what you'd do with the money if you cashed it out now.
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