Hi all,
New to life insurance and trying to get a handle on things as I recently found out I have a policy originally purchased by my grandfather. It's a whole life policy - which I've read isn't the best choice for most situations but I want to make sure I have a solid understanding of how it works, what I would gain/lose by cashing it out, and how I can reduce any taxes/fees while moving the money into a Vanguard account if that's the best route for us at this point.
Potentially Relevant Details: 25, married with plans to start having kids 3-5 years from now
- Current assets (other than insurance policy): ~$10k savings, ~$7k 403b, two paid off but older cars (i.e. 150k/200k miles)
- Current liabilities: ~$37k student loans ($21k subsidized for me, $9k subsidized for DW, $7k private loan that her parents want to pay but we want to cover if possible given 7% interest rate and the fact that they only make the minimum payment)
- My Income: $65k salary, $16k benefits but will be going to law school (not paying any tuition/fees/etc.) in August - have optional consulting role to bring in some side income if there's time/interest
- Wife's Income: Currently $16k as teaching fellow, will graduate with masters in May and make $35-40k + benefits upon graduation
Life Insurance Details: I'll be meeting with the agent two weeks from now so I'm not positive on the premiums, just basing it off what my father told me when he let me know about the policy
- Annual Premium: $600 (this seems super low to me but I don't have anything to gauge it against)
- Death Benefit: $53,000
- Mutual Fund Value: ~$7k
Primary Questions:
- Is the mutual fund value the "cash value" of the policy?
- Assuming I cancel the policy, can I roll the mutual fund over to Vanguard without paying taxes on the funds?
- Is it reasonable to ask for a chart showing the guaranteed values of the cash value, death benefit, etc. in the future?
- What other questions should I be asking?
Thanks for any and all input - it is much appreciated!