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If you're looking to get out of a whole life policy but still secure coverage at a lower price, you can look at completing a 1035 rollover into a Guaranteed Universal Life policy. It's another permanent insurance program that minimizes the buildup of cash value to keep the premium at the lowest possible level with premiums and death benefits fixed and guaranteed for life. The 1035 rollover portion takes the cash value inside the whole life policy and applies it to the first year premium for the Guaranteed Universal Life policy to lower the premium even further. This can be a very valuable alternative course of action that is definitely worth considering.
If you have a participating whole life policy, then the dividends paid by the program can be used to purchase paid-up additions to the policy (little amounts of paid-up coverage that accumulate over time that do not require additional premiums for the policy).
I hope the information is helpful. Please feel free to contact me for help with your coverage and if you have any other questions (you can reach me via the "contact me" button next to my name). There are no fees for my services - all quotes are provided at no cost to you. Thanks very much.
It all depends on how much coverage you need, and for how long. And - importantly - what rate you could command if you bought a new policy. To determine that, you should get prequalified. Make sure you know the company, product, and price before you formally apply.
1) Keep your whole life and purchase an inexpensive term policy to go with it.If you have been paying on your whole life for a long time, you may be able to quit paying premiums and still have a nice policy to keep for the rest of your life. You will probably never be able to purchase a new whole life policy as cheaply as the one you have now.
2) Surrender your whole life and buy a new term policy. You may have some cash from your whole life that you can put toward your term policy. However, you cannot buy term with a single premium - it must be on a pay period (monthly, quarterly, semi-annually, or annually). So if you want to trade one for the other, put the money of the whole life somewhere where you won't be tempted to spend it on other things.
However, I am not sure this will solve your problem. People often ask this question because they have “whole life buyers remorese.” They bought the policy because of the allure of the cash value, but then realized it wasn’t worth it. They were paying too much money for not enough coverage, and the cash they would be accumulating wouldn’t make that much difference in their overall wealth picture.
If this is the case, then reducing the whole life to paid-up term may not give you the coverage you need for as long as you need it. You might want to consider purchasing a stand-alone term policy with the face amount and guarantee period that will get the job done.
If you are concerned about qualifying for a good rate due to a medical or lifestyle issue, then make sure you are dealing with a broker who can place that type of case. You still may be able to get a very reasonable price.