Can You Transfer A Whole Life Insurance Policy To Another Company?
Posted September 27, 2009 – 10:23 am in: structured settlements FAQI am unhappy with both the performance and service on a whole life insurance policy that I’ve had for about 11 years. Do I have any options? I’d never get the same rates now. I was told when sold the policy that dividends could pay the premium after 20 years…doesn’t look like that is the case. Also, the cash value is LESS than the actual money i have put into it. Is this normal or do I have a crappy policy?
Tags: Another, Company, Insurance, Life, Policy, Transfer, Whole
11 Comments
Yes you can transfer the cash value in the whole life policy into another cash value policy (ie Whole Life to Whole Life, Whole life to Universal Life, etc) or into an annuity (such as variable and fixed annuities). Its called the 1035 exchange which you can move the cash value into another life policy or annuity without any taxes due.
But I wouldn’t do that anyway unless you are nearing retirement and have nothing saved, then I would move the cash value into variable annuity. If this doesn’t fit your description, then I would first check if there are any loans due on the cash value. You want to pay this off before exchanging it or canceling it because this loan will be considered as additional income when you do your taxes.
If there is no loan due, then I would first look around for companies that sells term insurance policies of 20 to 35 year. You should check out Primerica Financial Service. While some people don’t like their business opportunity, their service to clients is excellent. They provide a customize, complimentary, and confidential financial needs analysis that can evaluate your current finances and makes recommendations on what you should do next to reach your financial goals. They also can help you create a game plan to get out of debt and also re-define your investments (meaning they can make improvements so that you can get a better performance). Its really a great company to do business with.
When you qualify for term insurance and you accept the policy, you will see your premiums will be significantly lower than what you pay for whole life. I would use the savings and invest it every month. With the cash value in your whole life, I would cancel the life policy and put the cash value into a Roth or Traditional IRA. If you have too much cash value (anything above $4000 if you below the age of 50 or above $5000 is you are age 50 and above), then save the rest and invest it later. If you have a spouse, have the spouse open an IRA too.
I have never sold whole life insurance because of the way they are designed. If they paid out cash value and death benefit, then I would say its an “ok” product. But I would still sell term insurance and keep the savings separate because you can afford the right amount of protection and achieve higher rate of returns in your investments. As your investments grow and as you get older, the need for life insurance declines. Eventually, your investments will grow so large that you don’t need life insurance anymore and you become self-insured.
Your in wrong whole life plan being with or your insurance company going to public after you bought the whole life policy, any way, you don’t want to wait any more, you can use 1035 exchange form to transfer your cash value to Massmutual or northwestenr mutual comapny ASAP, this two company agent will help you to do this, you just need to sign the paper.
-Mutual company whole life policy will let you gain a lot of cash value down the load, but not much insurance agent want to tell you this, because they work for public stock tread life insurance company, if your policy in stock tread company, of cause the money that company make is going to stock holder first, you will get very less divident.
– Some will say, buy term and invest the different , Do you know which mutual fund to invest? when to buy and sell? who suggect to invest in stock market, are they can show you how much they gain in last 10s to 20s year? is that any of investment history can show you 100s year back? only few investment can show you long term history, whole life is one of them.
– Don’t give your self wrong, your are in right plan, the only thing that you need to do is change your policy to Mutual life comapny.
-If captive company paid me average 9% dividend for last 30 years, than you and I want to be part of it, are you?
If you are unhappy with your lilfe insurance that you have now. I suggest that you look into other insurance agency and find one that will fit your needs. and I don’t think that you can transfer your life insurance policy to another company, but it won’t hurt to ask the new insurance agency if you can do that. good luck.
it depends on the company
It is possible to move the cash value to a new company and if it is done properly you won’t pay tax on the transfer. Contact a Northwestern Mutual or Mass Mutual agent to do this.
get rid of whole life. they are expensive and they don’t do anyone good. buy term and invest the difference!! see my profile on how my family got screwed by whole life.
Drop that whole life crap, and buy cheaper term. You will get more coverage for less money, then save the difference and put it into something that preforms better. Which by the way would be anything. Plus if you need the money you don’t have to barrow it from the whole life policy, which is usually 6-8%.
When you bought the policy you signed paperwork stating that dividens are NEVER guaranteed on ANY policy with ANY company. You should never count on dividends to make the payment for you.
Sounds like you should have bought a 20-year pay policy which would have definitely been paid up in 20-years.
You should talk to a knowlegable agent face to face before you decide to cancel the policy. Find out all your options and make a determination based partly on your current health and life expectancy.
You can not actually transfer it to a different company. You can cash it out and buy something else. That may or may not be wise.
No, they are not transferrable.
Whole life dividends RARELY pay the premiums. Cash value is NEVER the actual money you put into it – cash value usually is about 10% – 20% of what you pay into it, always.
What you have is a NORMAL whole life insurance policy. It’s NOT a good investment, it’s NOT a savings account, it’s a financial planning tool.
Since you’re complaining about it, I’d strongly suggest you write down WHAT EXACTLY you want your life insurance to do for you, and seriously consider cancelling that policy and seeing if a term policy would better meet your financial goals.
Term would likely cost much less than you’re paying right now – even with rates that are 11 years old. And if you’re looking to ‘get your money back’ while you’re still alive – well, insurance isn’t the tool for that. So no use throwing good money after bad, if the whole life policy isn’t getting the job done.
Beware of the “tax penalty” threat. You ONLY pay taxes (capital gains) on your cashed out value, for the portion of the cash value that EXCEEDS your total premium payments. Which, as you’ve noticed, doesn’t happen.
with each policy you have options. first the buy out option you can take all of the money you paid in so far in a lump sum check. or you can buy a reduced term policy that will give you some insurance for a certain amount of time with the premiums you have already paid. or you can buy paid up life insurance which is with the premiums you have already paid buy a paid up policy at a certain value.if you need anymore advice i am an insurance agent and you can email me at monteleone0927@yahoo.com thanks
There are a number of things you can do. I never really suggest going with a “captive company” like Mass Mutual or Northwestern Mutual because you are only going to see their products and their rates. There are so many companies that offer really good products. You owe it to yourself to take a look at all of your options. Find someone who is independent and has experience in such arrangements. In a whole life policy there is a portion of your premium that will go towards paying your “cost of insurance” and the difference is your cash value that is invested. The portion that is invested is probably earning 4% – 6% annually. Look at doing a 1035 exchange with another carrier. Depending on your age and what the death benefit is you could possibly sell the policy in the secondary market. (Life Settlement) In a Life Settlement you can have little or no cash value and still sell the policy.