we have an omni whole life insurance policy. that can be used as a retirement savings account correct? it is my understanding that we can take the cash value when we reach a certain age.
2007-10-09 07:59:02 · 4 answers · asked by donovan t 3 in Business & Finance ➔ Insurance
Many times people say 'whole life' because the policy is intended to last your whole life. But 'whole life' is an actual policy...others that last your whole life and have cash value are. Universal life, variable universal life, etc. If you have a 'participating whole life policy', in addition to cash value, you should also get 'dividends' which should be added back into the policy. The advantage to cash value life (like what you have) is that you can indeed take a retirement out of it....they have provisions so that you can take it out tax-free (you typically have to pay an interest rate, but that is dramatically cheaper than your tax rate and most policies will credit your account with an additional rate if you pay the interest so that your net charge for 'borrowing' your money is 1%). Also, whole-life policies are known as 'self-completing' if you have waiver of premium on the policy. If you become hurt or sick and can't continue to contribute to the policy, the policy will pay the premium.. Also, if you pass away, the death benefit is there. Whole life is definitely a tool in one's financial planning. The advocates of 'buy term only' are typically focused just on the cost. While everybody wants to save money, if you truly understand how life insurance works, whole life is typically a more attractive option. You get what you pay for. Nothing is free. And btw, there is no minimum age where you can take it out (i.e. 59 1/2 for other retirement accounts)...but bear in mind that insurance contracts are front-end loaded...meaning that the bulk of the fees come out in the beginning years, so the longer you have the policy the more valuable it becomes. Not so great if you want to retire in 5 years as opposed to 20 years.
2007-10-13 06:20:14 · answer #1 · answered by Dan H 2 · 0⤊ 0⤋
You can take the cash value any time, but that's not a good idea.
What you need to do is: when you retire, tell the insurance company to convert the policy to an annuity of the same cash value. This conversion is tax free and will give you a monthly check.
2007-10-09 08:06:30 · answer #2 · answered by Ted 7 · 0⤊ 0⤋
you can take the cash value out in the form of loans against the policy at retirement age.....make sure you get annual inforce illustrations showing the policy values as many times the cash value does not accumulate as intended when you first bought...take a look
2007-10-13 01:20:12 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes. But I don't recommend whole life insurance policies because they are too expensive. It's better to get term life and save yourself. You would avoid the high fees associated with whole life policies.
2007-10-09 08:06:38 · answer #4 · answered by Unsub29 7 · 0⤊ 0⤋