How to best get out of a Universal Life Insurance Policy

[BadCaseOfWonderlust]

Completely new to the forum, so please be patient with me, but I would greatly appreciate your advice on this topic

I've always always been thrifty, but I'm starting to really try to grow my husband's and my stash. When my husband and I got married, he told me he received an inheritance from his grandmother but I never paid much attention to it. After starting from the beginning of the MMM blog, I started to get curious about how it was invested. I was shocked to find that it has been losing money steadily since 2012 because it has moved companies 4x since 2012 and is partially invested in a Flexible Premium Adjustable Universal Life Insurance Policy with Indexed Funds that is managed by a FA. I like the FA as a person, but I want to hopefully retire early... but at least retire! We decided we want to manage the money ourselves, but aren't sure how to maximize the money we can get out of the insurance policy?

How can I best get out of this insurance policy and roll it over to Vanguard? The Planned initial premium is ~$24000 with a surrender charge of $16.17 per $1000. I feel like I'm missing a key point because surely the fee would be more than ~$350?

There is also $45000 invested in a TD Ameritrade account, but I can roll that over to an Vanguard IRA without tax penalties correct?


If you need any more information, please ask. I would appreciate any advice you can give us.

[Financial.Velociraptor]

For the insurance policy, you want to speak directly with the issuer about options.  You may be able to convert to a more conventional whole life policy where the investment portion is in cash/bond equivalent instead of an exotic variable market equity instrument.  Most whole life companies have a very pedestrian investment option that is more or less guaranteed to earn about 5-6% per year.  If the earnings are sufficient to "autopilot" the policy, you could end up with permanent life insurance benefit with no additional premiums.  Price out a term life policy and compare the benefit of keeping the policy to the cost of replacing the insurance component.  Wish it was more simple.  Check out books at your local library or library interloan program on "infinite banking, income for life" and other names for how to maximize a whole life policy with a Paid Up Additions (PUA) rider and the various neat tax shenanigans that can be done.  But that is mostly best for people who already have a policy with cash value they are trying to maximize.  Ordinary folks who don't need to shield an estate from the estate tax are USUALLY better of with "term and invest the difference".

Vanguard customer service can help you with the brokerage account.  Usually an "ACAT" transfer is simplest, cheapest, and free of tax consequences.  Can take six weeks but when I did one to Interactive Brokers, it took 3 days to settle.  Vanguard is probably similarly efficient at their scale.