{"id":3577,"date":"2022-12-13T17:20:55","date_gmt":"2022-12-13T17:20:55","guid":{"rendered":"https:\/\/wp-dev.zanderins.com\/?p=3577"},"modified":"2025-04-03T22:39:32","modified_gmt":"2025-04-03T22:39:32","slug":"should-i-keep-my-cash-value-policy-if-it-is-paid-up","status":"publish","type":"post","link":"https:\/\/wp.zanderins.com\/2022\/12\/13\/should-i-keep-my-cash-value-policy-if-it-is-paid-up\/","title":{"rendered":"Should I Keep My Cash Value Policy If It Is Paid Up?"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-3558\" src=\"https:\/\/wp-dev.zanderins.com\/wp-content\/uploads\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-1.png\" alt=\"\" width=\"1110\" height=\"411\" srcset=\"https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181824\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-1.png 1110w, https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181824\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-1-300x111.png 300w, https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181824\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-1-1024x379.png 1024w, https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181824\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-1-768x284.png 768w\" sizes=\"auto, (max-width: 1110px) 100vw, 1110px\" \/><\/p>\n<p>Dave never recommends keeping a cash value policy, regardless of how long or short you have had it, unless you are unable to qualify for a new <a href=\"https:\/\/www.zanderins.com\/term-life-insurance\/instant-quotes\" target=\"_blank\" rel=\"noopener\">competitively priced term life policy<\/a>. However, you should never cancel an existing plan until you have received the new policy and reviewed it to make sure it meets your specific needs. Most people don\u2019t realize there is still a cost to paid-up policies in that you are paying a higher price for the cost of insurance and administrative fees than a term life policy. That means you are receiving a poor rate of return on money that could be used to pay down debt or be invested more wisely.<\/p>\n<p>The basic premise for cash value plans is that you will need life insurance your whole life (hence the name \u201cwhole life\u201d insurance). This means that you are overcharged in the early years to cover the higher costs in the later years. Dave\u2019s opinion is that if you buy term life insurance, you avoid this over-payment period entirely, leaving you free to use your money instead to attack debt and increase your savings. With a 15 or 20-year level term policy, you have time to reach the point in your financial journey at which you no longer need life insurance.<\/p>\n<p>The cash value in your plan is available to you subject to the surrender penalties of the policy. These surrender charges decrease over each year you have had the plan and typically are gone after 10-15 years. Dave would typically recommend using the remaining cash value to intensify your debt reduction efforts, help establish your emergency fund, and take advantage of better investment options.\u00a0 Wherever you are in the Baby Steps is where you should focus this money. Whether your debt is related to mortgage, school, health expenses, or something else, Dave\u2019s Baby Steps address how you should prioritize your existing savings. It just doesn\u2019t make sense to maintain a savings plan of any kind at a poor rate of return while paying out higher expenses for credit card and other debt instead of addressing more important financial objectives. Oftentimes, companies try to dissuade you from cancelling your cash value policy by implying that you will face serious tax consequences if you do. It is uncommon for a tax to be due, however. In the rare cases when you may owe taxes, it is based only on the refund you receive that is in excess of your paid premium, although you will need to include any dividends you received during the term in addition to the cash value. Regardless of the tax situation, Dave recommends cancelling your cash value policy and opting for term life instead (but don\u2019t cancel until your new policy is active).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dave never recommends keeping a cash value policy, regardless of how long or short you have had it, unless you are unable to qualify for a new competitively priced term life policy. However, you should never cancel an existing plan until you have received the new policy and reviewed it to make sure it meets [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":3530,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2,8],"tags":[],"class_list":["post-3577","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-dave","category-term-life"],"better_featured_image":{"id":3530,"alt_text":"","caption":"","description":"","media_type":"image","media_details":{"width":740,"height":411,"file":"Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up.png","sizes":{"medium":{"file":"Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-300x167.png","width":300,"height":167,"mime-type":"image\/png","filesize":77510,"source_url":"https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181638\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-300x167.png"},"thumbnail":{"file":"Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-150x150.png","width":150,"height":150,"mime-type":"image\/png","filesize":38719,"source_url":"https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181638\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up-150x150.png"}},"image_meta":{"aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0","keywords":[]}},"post":3517,"source_url":"https:\/\/static.zanderins.com\/wp-content\/uploads\/2024\/11\/27181638\/Should-I-Keep-My-Cash-Value-Policy-If-It-Is-Paid-Up.png"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.8.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Should I Keep My Cash Value Policy If It Is Paid Up? | Zander Insurance<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Should I Keep My Cash Value Policy If It Is Paid Up? | Zander Insurance\" \/>\n<meta property=\"og:description\" content=\"Dave never recommends keeping a cash value policy, regardless of how long or short you have had it, unless you are unable to qualify for a new competitively priced term life policy. 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