AI Legalese Decoder: Simplifying Cash Out Whole Life Policies After 8 Years
- November 30, 2023
- Posted by: legaleseblogger
- Category: Related News
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Title: Evaluating the Options for a Whole Life Legacy 65 Policy and the Role of AI Legalese Decoder in Decision Making
Introduction
Eight years ago, in my early 20s, I made the decision to purchase a Whole Life Legacy 65 policy from Mass Mutual. Now, after contributing just over $100 per month since 2016, I find myself in a situation where my policy adviser is recommending that I double my contributions and convert my rider due to the increasing expenses associated with the policy. In addition to this policy, I also have a basic life insurance policy through my employer.
Current Policy Details
The base policy of the Whole Life Legacy 65 policy is set at 150K, with an estimated benefit of over 250K. However, the current cash value only stands at about $5K. This raises concerns about the effectiveness of the policy and the financial implications of continuing with it.
Considering Alternatives
Doubt has now arisen within me regarding the wisdom of doubling down on my contributions as suggested by my policy adviser. With doubts in my mind and concerns about the increasing fees, I am contemplating the option of terminating the policy. However, this decision is not without its complications. I have come across conflicting advice, with some sources suggesting that it is better to wait until being 10-15 years into the policy before considering cancellation.
Role of AI Legalese Decoder
In order to make an informed decision, I have begun considering the assistance of the AI Legalese Decoder. This advanced software utilizes artificial intelligence to analyze and interpret complex legal documents and financial agreements. By using the AI Legalese Decoder, I can gain valuable insights into the terms and conditions of my Whole Life Legacy 65 policy. Additionally, it can aid in understanding the implications of doubling my contributions, the potential consequences of canceling the policy, and the options available to me.
Final Considerations
While it is evident that I may incur a loss by canceling the policy, the long-term implications of continuing with it need to be carefully evaluated. Despite feelings of regret over this decision, I hope to gather as much information and advice as possible before reaching a conclusion.
In conclusion, the AI Legalese Decoder can be a valuable tool in helping me navigate the complexities of my Whole Life Legacy 65 policy and weigh the options available to me. By leveraging this cutting-edge technology, I can move forward with confidence in my decision-making process.
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Original Content:
AI Legalese Decoder is a powerful tool that can help lawyers and legal professionals decipher complex legal jargon and understand the true meaning behind legal documents and contracts. This AI-powered software uses advanced natural language processing and machine learning algorithms to analyze and interpret legal terms and phrases, providing users with clear and easy-to-understand translations. With AI Legalese Decoder, legal professionals can save time and effort by quickly extracting key information from legal documents, ensuring they have a thorough understanding of the content and can make informed decisions.
Rewritten Content:
How AI Legalese Decoder can Help with Complex Legal Jargon
AI Legalese Decoder offers a revolutionary solution for lawyers and legal professionals to effectively unravel intricate legal jargon and gain a comprehensive understanding of legal documents and contracts. This cutting-edge AI-powered software leverages sophisticated natural language processing and machine learning algorithms to meticulously analyze and interpret complex legal terms and phrases, delivering users with precise and easily digestible translations. By equipping legal professionals with the capability to effortlessly extract essential information from legal documents, AI Legalese Decoder enables them to save valuable time and effort, empowering them to make well-informed decisions with confidence.
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In the legal realm, understanding the true meaning behind legal documents and contracts is a pivotal aspect of ensuring that legal professionals can effectively carry out their responsibilities. With AI Legalese Decoder, legal professionals have a cutting-edge tool at their disposal, allowing them to decipher complex legal jargon with ease and accuracy. This innovative software’s ability to analyze and interpret legal terms and phrases provides legal professionals with the clarity and insight needed to make well-informed decisions, ultimately leading to increased efficiency and productivity.
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****** just grabbed a
Does anyone outside of the insurance rep think that whole life is not a rip off. I have never heard anyone say it is a good investment
Just exit it. Don’t let some sunk cost fallacy keep you holding onto a bad product.
Do you even have dependents who need insurance?
YouÔÇÖve paid in $8,400 minimum. Forget what you could have gotten in returns; your cash value is less than the cash you put in!
The best time to cancel would have been day 1. The second best is now.
There’s a good phrase I heard years ago. Whole life policies aren’t bought, they’re sold.
To answer your question, Yes! Cancel it ASAP! Don’t fall for the sunk cost fallacy here. “Well I’ve already paid X… Might as well keep paying”. Call your advisor back right now and say “I’d like to cancel”. Keep saying it over and over again until it’s canceled. Don’t let him talk you out of it. You already spent $8k to have $5k in cash value….
Do you have a spouse or dependents you’re trying to protect in the event something happens to you? If so, get a 20 year term policy. If it’s just you, then you don’t need life insurance.
While there are some cases where whole life policy can make sense, for 95% of people who have them, they’re a waste of money, and you’d be better off with much cheaper term insurance.
Yes you should get out if it asap. Most expensive insurance possible, definitely not worth it in your situation.
Wait iÔÇÖm confused how is your policy getting more expensive? IsnÔÇÖt whole life insurance usually structured so the payments never change? $100 a month? for the last 8 years puts you at at least $9600 of your own cash added. How long is your policy payment term 20 years?
how close are you to the dividends funding the insurance?
Just so you have some idea of what your opportunity cost was, I ran the numbers through an investment calculator using the actual annualized rate of return for SPY (an S&P 500 tracking ETF) over the period in question – 06/01/2016 until today.
A $100/month investment in SPY over that period would be worth $18,822 by my calculations.
This computation excludes dividends which would have been fairly small. It also doesnÔÇÖt account for periods when you couldnÔÇÖt quite invest all of the $100 because you had a fraction left over which wasnÔÇÖt enough to buy an additional share. My guess is though, the number is fairly accurate, within probably a few hundred dollars.
DonÔÇÖt be discouraged by this, it is not meant to discourage you, it is meant to help you see what all the possibilities are. The stock market couldÔÇÿve crashed over that same period also and you could be sitting on a losing position in SPY under those circumstances. No investment is perfect. But with a time horizon of 10+ years an investment in SPY is a very safe bet.
Absolutely walk away for that product. The $ are gone. The best thing to do is take the cash value and leverage it to pay down debt, establish emergency savings, or invest. (Depending on your situation). The people who sell whole life are the only ones who have advice to keep it.
> converting my rider and doubling my contributions as my current policy is getting too expensive,
What? Your policy is too expensive and so he recommended you start paying *more*?
Get rid of it.
If you have dependents, get a term life policy independent of work.
Without knowing many variables of your policy, I can guess with some generic information.
1st. your breakeven point is probably around year 14 where you could collapse the policy and get every dollar out that you put in. That means at that point you would have paid zero dollars and were insured the whole time. But that’s actually where it starts to get really good. With dividend payments growing, you will have more available cash value then money you put in. If you really don’t like it, then wait a few years and take all your money (assuming a catastrophe doesn’t happen and your family needs you to be insured).
2nd. A Whole Life policy is ‘not’ a market asset. It is a fixed growth asset based on “Guarantied growth” and Dividend growth that most major companies have been paying for well over 100 years. The asset is designed to work ‘alongside’ your market based assets to protect those assets from the market itself. In retirement when you are drawing off of your 401k, what happens when the market has a 30% correction, if you take any money from that asset you ‘lock in’ all of those losses (that 80k you withdrew may have just cost you 250k in unrealized gains). Use your cash value life insurance as your income source while the market recovers and save your 401k value from itself.
3rd. again without know what the rider is, the more money you put in cash value life insurance the faster, the more value you have when you need it. He may be right, but I would want to see some illustrations first.
4th The withdrawals from a cash value life insurance are (well, should be) tax free. If you really want to have a game, figure out how much of your 401k you can withdraw without making your social security taxable, then supplement the rest of your income with other tax free assets (Roth IRA, Cash Value Life Insurance, mune bonds) and see if you can push yourself into the 2-3% effective tax bracket… This is very possible with tax free assets!
I am sort of on ‘team life insurance’ and when I read stuff on these forums and I constantly read how much of a bad investment Whole Life is, but then the explained reasons why it is bad are all not accurate and never what the asset is for. Also, what the asset really is and the strength of what it really does are never talked about.
ouch…yes, when you make a bad decision, the correct response is to stop it. the wrong decision would be doubling down.
After 20-25 (!!?) years of 8% (or higher) dividends, our whole life dividends cover all the premiums. Without paying any more premiums, I can leave it to grow over time.
Keep it. I wish I could go back to my 20ÔÇÖs and get a whole life policy like this. IÔÇÖd be done paying for it at my current age, and would still have the coverage. IÔÇÖm in my mid 40ÔÇÖs. I went with a term policy in my 20ÔÇÖs and outlived it, so I had to start a new policy a couple years ago. If I had the policy you now have, IÔÇÖd be done.
YouÔÇÖre already 8 years in, and the cash value will be less than what you put in. If you see it through to the end, the death benefit is way more than youÔÇÖll ever put in.
DonÔÇÖt look at it as an investment vehicle or something to cash out later. Look at it for what it is ÔÇö life insurance that never expires. Your 40, 60, and 80 year old self will thank you.
Keep it, I wish I had kept mine. Time flies kids grow, grandkids arrive. Having tax free income is an awesome thing to have available. If you can afford it don’t even think about it.
No, you shouldnÔÇÖt cancel it. Canceling now would be a disaster – youÔÇÖve already paid basically all the front loaded costs of the policy. From now on, your premiums go directly into cash value which you can access as your emergency fund.
Think of this as your savings account moving forward, with the benefit of a $150k death benefit if you were to pass.
Surrendering it would be a huge mistake.
Everyone here shits on whole life insurance, but one question I have is how expensive is term life insurance in your 50s and older? I know it’s dirt cheap in my 30s, but I have heard it gets very expensive when you’re older.
I just submitted to cash mine out too! I got the policy in 2016 when I was pregnant and newly married, through my husband who is a member of the knights of Columbus. We paid almost $200/month all these years for it. WeÔÇÖre divorced now so IÔÇÖm working on separating anything we still have thatÔÇÖs joint and called to find out if I could even keep this policy since it was through him. The rep tried to sell me SO HARD on keeping it and was so offended when I brought up what the personal finance community thinks of whole life insurance. In the end I didnÔÇÖt back down and am anxiously awaiting the deposit from cashing it out. I know itÔÇÖs in process because the monthly payment that came out this month was only for his policy, not mine. I have basic and supplemental life insurance through work so IÔÇÖm never doing this again!
I agree with those voting to exit the policy. Consider it a life lesson and at least youÔÇÖll get back more than half what youÔÇÖve put in.
But I also think you should consider getting a term plan if you have a spouse, kids or anyone depending on your income. If not then wait until you do. Jobs can change so your insurance through work is fine as an extra policy but IÔÇÖd much prefer the security of term life. I got a 30 yr plan in my early 30s so that my wife and kids wouldnÔÇÖt lose the house if I pass. After it expires IÔÇÖll be retired, the house will be paid off, the kids will be independent (one hopes) and it wonÔÇÖt matter anymore.
I think many peopleÔÇÖs issue with whole life insurance is that they look at it as an growth investment vehicle. Rather should look at it as a savings account which provides a death benefit and allows you access to some of the cash you contributed. If your looking for retirement growth and such IRA may work better
What rider are you talking about? The cost of WL does not go up. This is not the sub to ask about WL if anyone here gives you any advice besides buy term they will just get downvoted. This place is just an echo chamber on this topic.
If you want proper advice about life insurance talk to an independent professional whoÔÇÖs been in the industry for decades and doesnÔÇÖt need to just make the next ÔÇ£saleÔÇØ to survive. This is not the place for correct advice on the topic. Just reading through everyoneÔÇÖs responses I see so many factually incorrect statements.
Make sure there are no penalties. Mine has some very hefty penalties if you exit before 10 years.
It wasnÔÇÖt na├»ve at all. You were very smart to buy whole life when youÔÇÖre 20 years old. Is this policy just whole life or is it an indexed universal life policy? Does it have living benefits in case you get sick? Does it provide income to draw from for later in life?
The one that you have from your employer is only good while youÔÇÖre working there, so itÔÇÖs really not yours. Once you are no longer working there you donÔÇÖt have it.
$100 a month for 250K is not bad and it will build cash value as you get older and you can eventually borrow from it for whatever purpose you want as the cash value grows. I would also look into an indexed universal life policy because the cash value grows much faster since itÔÇÖs tied to the market but when the market goes down, you donÔÇÖt take a loss. Also, when you borrow from it, you continue to accrue interest on the amount that was there before you took it.
But youÔÇÖre young age you can have a very substantial income later in life on an IUL that will be guaranteed until you die. I have one.
Remember, life insurance is cheapest at the age you are now, but only gets more expensive as you grow older. My advice would be to keep it.
By the way, stay away from the financially illiterate comments that are here. Reading them is just proof that the American education system is absolutely devoid of it. ItÔÇÖs sad.
IÔÇÖm 14 years into mine and 8 years into my wifeÔÇÖs they almost pays for themselves while providing assurance that our children will be able to maintain their lives should something happen to me and/or my wife. I accept there is a cost for the product and hope our kids receive it to offset estate taxes.
Hi just want to tag in here since Im in a similar position.
I’m a 37-year-old man or manchild. Unmarried.I don’t plan on having children.
I’m getting a more wholistic view of my current financial situation and recently discovered that my mom has been contributing to a flexible premium adjustable life insurance policy through Modern Woodman for years.
Now, I know everyone has their opinion on life insurance. But given my situation, I’m unmarried but have a partner, I’m not sure I really need this policy.
There is about $42k in contributions. I just don’t see why I would keep my money with them… I’m getting a 4% interest rate minus expense charges and insurance costs all for a potential payout of $200k plus my contributions.
Is it silly to have my dear mother, bless her, to keep contributing? Should I take this money out and invest somewhere else? Will I be taxed on withdrawals?