My mom bought a Prudential whole life insurance policy for me when I was a baby. I took over the payments in my early 20s. I’ve had superior employer-provided life insurance for 6 years, though, so I’ve decided I don’t need the whole-life policy anymore.
It’s only a $5k policy. The monthly cost is/has always been $5.60. I’m not sure what month it was purchased, but the total amount of paid premium is $1800-1900. It was just purchased to help cover funeral costs, which is why it’s so small and inexpensive. It’s a fart’s worth of money, so I don’t really think going the broker route is going to work for me. Who would even want to purchase it?
So, what can I expect to happen when I try to cash it in? I’m going to call Prudential and figure it out within the next couple days. I just wanted to know what to expect so I don’t get boned. Should I try to negotiate the dollar amount after they make an offer?
When I cashed in the one my parent’s had purchased for me (this was a bunch o’years ago), I called the phone number on the paperwork, and asked them how this worked. They told me what to do, how much money I would get, I did what they told me, and they sent me a check. There was no “negotiating” involved - it’s worth a certain amount of money period - there weren’t any negotiations.
I THINK so - and for some reason I think it may have been more, but don’t hold me to that - this was 15 years ago. I have been trying to think where I may have put the paperwork, but that’s an excercise in futility - if you saw my third bedroom where I store everything you’d understand. Sorry I can’t be more help - I’d say just call them and ask them. I can’t think of any way they could really rip you off, so to speak.
The plan documents should include the “surrender amount”, which is how much you’ll get if you cash it in. They should be able to tell you this over the phone, as well. As Missy2U said, it will be a fixed amount, no negotiations possible.
Something I’ll throw in, though, because we just went over insurance matters with our financial adviser: employer-provided insurance is just that, employer-provided, so having a backup policy you control yourself isn’t a bad idea in case you find yourself in need of such in between jobs. Whether or not it’s whole-life or term is up to you. (Both the spouse and I have variable universal life insurance policies that we’ve decided to hold onto.)
My parents bought whole life policies for us kids when in the 1950’s. When I was in my 30’s, settled and employed, they told me about it and suggested I cash it in so they didn’t have to bother with it anymore. I called the number on the paperwork and the agent agreed to meet me at a MacDonalds, since he didn’t have an office. I got a couple a hundred dollars and a high pressure sales pitch for the guy’s financial services. He was oh, so reluctant to let me cash in and not have that life valuable insurance coverage. So be ready for the hard sell.
Thank you for sharing the experience! Talk about shady…
In my case, it’s Prudential and I don’t have an agent. So I’ll probably be ok. I’m sure they’ll ask me not to sell it, but probably not too hard. I can’t imagine a company that large would miss my $67.20/year all that much.
Just got off the phone! I learned a lot, woop. Here’s what I found out:
[ul]
[li] The policy would pay out $8975 in the event of my death. I’m assuming that means my mom bought a $9k policy and there’s some kind of processing fee, because that’s a weird number.[/li][li] My surrender cash value is currently $1735.97, but I can add another $47.80 in dividends for the year if I wait until the policy’s anniversary date (October 10th).[/li][li] The rep said that once the policy is 30 years old (within the next couple years), I could continue the coverage for life without needing to pay any more premiums. She didn’t mention whether this would cause the payout to decrease, and I didn’t ask. I wasn’t interested regardless.[/li][/ul]
She was surprisingly pushy about trying to retain me as a customer. I said I have coverage through work. I also said a financial advisor had told me to drop the Prudential policy, which isn’t a lie if you consider the advice provided by google. She spent about 5 minutes trying to convince me otherwise, I just put the phone on speaker and let her talk. I asked for the paperwork and said I’d discuss it with my advisor, and she was cool with that.
So, I am definitely going to cash it out next month. I’ll be able to pay off my credit cards!
If it is dependent on your employer’s continued participation, and if your employer decides to drop coverage, or goes out of business…
You may wish to not only continue it, but look into increasing coverage while it’s still cheap
This is assuming life insurance premiums increase with age and/or health, as do medical. policies. I have no experience with it.
Whole life is generally inferior to term for a young adult. The policy was good for a low-income parent to keep throughout my childhood, so she could have buried me if I’d died young. But it has outlived its usefulness.
Sorry I can’t be more help - I’d say just call them and ask them. I can’t think of any way they could really rip you off, so to speak. 
She spent about 5 minutes trying to convince me otherwise, I just put the phone on speaker and let her talk. I asked for the paperwork and said I’d discuss it with my advisor, and she was cool with that.