I'm cancelling my policy. I had it for a year. I put $3500 in it so far. The agent said that won't be refunded to me when I cancel. Can this amount be a tax write off?
2006-09-29 02:39:18 · 13 answers · asked by Anonymous in Business & Finance ➔ Insurance
Nope. Instead, you maybe taxed on the gains on your cash value. Consult a tax advisor. It is definetly not tax deductible.
Your life agent is lying to you when he says that you will get nothing in return when you cancel your policy. This is only true if surrender charges equals the worth of your cash value.
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2006-09-29 17:06:10 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Cash value is not a tax deduction and it is not refunded because it really repesents the amount of self-insurance you have in the policy. At this point, however, there may simply be no cash value in the policy. If you were to take out a policy loan and then die the death benefits paid by the company would be reduced by the amount of the outstanding "loan", which is really your own money. If you have a $25,000 whole life policy and the cash value is $5,000, the amount of actual insurance is $20,000 which is the risk to the insurance company. If you had the same $25,000 policy with $5,000 in cash value and no outstanding loan and you were to die, the insurance company would pay the $25,000 face value of the policy and keep the $5,000 cash value. Since the cash value is really your own money, you can get it ONLY while you are alive. The death benefit is simply reduced by the amount of the cash value you get as a "loan". Odd to have to take out a loan of your own money and then to pay interest on it to boot!
If you want to cancel the policy, take out a policy loan for the maximum you can get on the cash value. Once you have it, then simply stop making premium payments. The agent was right in saying that you will not get the $3500 you put in because part of that represents premium. Some policies do not begin to build any cash value until after the first year, sometimes two. In your original paperwork that you got when the policy was issued there should be a table of cash value. Look in that and see what the cash value is at end of one year. Don't be surprised if it is $0.00.
You have just learned why it is a good idea NEVER to buy an over-priced whole life insurance policy or any type policy by any other name that builds "cash value". Get term insurance instead, it is a lot cheaper and works just as well. If you want "cash value" open a savings account and put the difference in that. You'll be better off. After all, you automobile insurance policy does not build "cash value", does it? No. You homeowner's insurance does not build cash value, does it? No.
So much for the great life insurance scam.
2006-09-29 02:55:57 · answer #2 · answered by Kokopelli 7 · 0⤊ 0⤋
You have to have it long enough to become "vested". Then you can borrow your own money.
If you took out a term life insurance policy and invest the difference in cost between the two, you will come out WAY ahead!
The problem is most people can't save money
2006-09-29 02:42:42 · answer #3 · answered by Anonymous · 0⤊ 0⤋
conventional and entire existence regulations are in reality legal scams that prey on those who do not comprehend compounding through promotion and marketing them with the purpose to construct "money value". existence coverage is a device to provide on your household in case you die, no longer a fashion to keep money. in case you invested your month-to-month rates in a mutual fund rather, they'd advance at 8-12% a three hundred and sixty 5 days lengthy-time period, and go back you far extra money than a "money value" coverage. to guard your household, you should purchase time period existence coverage for about 10% of the fee of "entire existence" Do the maths: enable's say to procure entire existence for $three hundred/month for the subsequent thirty years; assuming you do not die, you will pay in (30 x 12 x $three hundred)= $108,000, and get again possibly $one hundred twenty,000 on the top. Woohoo! You made money, perfect? yet in case you paid $30/month for a time period existence coverage rather (and invested the different $270 in a boost mutual fund rather of in rates), on the top of 30 years in case you probably did not die, you would get no longer something from the coverage (oh nicely!), and performance about $450,000 contained in the mutual fund. And your household would nevertheless have the death income lump sum contained in the progression the unthinkable did happen. entire and conventional existence coverage only pay ideal commissions to those who promote them, it really is what makes them primary!
2016-11-25 02:18:44 · answer #4 · answered by Anonymous · 0⤊ 0⤋
No. Insurance is NOT an investment, so it's NOT a loss. It's just a dumb purchase.
Sorry.
2006-09-29 10:40:07 · answer #5 · answered by Anonymous 7 · 0⤊ 0⤋
what a waste of money at has know cash value at this time.
2006-09-29 02:48:43 · answer #6 · answered by Anonymous · 0⤊ 0⤋
no, because it is not a cash value, it was merely an expense you incurred while you paid to have it in force.
2006-09-29 02:42:13 · answer #7 · answered by David S 3 · 0⤊ 0⤋
I'm not sure... I think it may be able to. Its should be if you can write off Lottery Tickets!
2006-09-29 02:40:40 · answer #8 · answered by digitaldancer22 4 · 0⤊ 0⤋
It is deductible just in case you die, then you won't need it.
2006-09-29 02:42:10 · answer #9 · answered by Classy 7 · 0⤊ 0⤋
No it can not. And why can't this be refunded?
2006-09-29 02:40:14 · answer #10 · answered by Anonymous · 0⤊ 0⤋