Should I Keep My Cash Value Plan if I Wouldn’t Save Money by Switching to a Term Policy?

If you would not save money by switching to a term life policy, we generally advise keeping your existing plan and factoring those expenses into your budget. You should, however, make sure your current plan is not underperforming (i.e. the dividends or interest are not keeping up with the increasing costs of insurance as you get older). If that is the case, then eventually you will have paid more for the existing policy than it is worth. You can also request an “in-force ledger” from your current insurance company, which will project the life of the policy at the current premium paid and the interest rate/dividends being paid to make sure the policy does not falter in the future.

Remember that as you pay down debt and increase your savings, your need for life insurance decreases, meaning you can slowly reduce the amount of cash value life insurance you have, then redirect those funds to better investments.

Not sure if you’d save by switching to a term life policy? Compare quotes for free on our website.