After doing some reading/research I've come to the conclusion that I shouldn't have opened my Universal Life policy($100,000).  Didn't really know all the facts back then and just went with what my adviser told me.  I've been reading through all the "fine print" on my policy and discovered that if I close my policy now I will have to forfeit about $600.00 of the $4700.00 that would be paid back to me.  Of course if I wait about 6-10 years the "forfeit" amount drops significantly.  

Should I go ahead and close the policy, up my term if need be, take the hit and invest the remaining cash else ware?  Or just let the policy ride.  Let me know your thoughts.

What did the "fine print" say about this 'seperate account' when you die?  Do you get it plus the death benefit?   How was the performance of this account?  

Here's what I found in the fine print....

OPTION 1. = The face amount ($100,000) includes the account value.  

OPTION 2. =  Is the face amount in addition to the account value.  

Finally read enough to see that I have option 1.  

Here's some other info....

-this is costing me $65.00 a month
-the policy guarnteed interest rate is 4.50%.

found this too...."Based upon the planned periodic premium, the guaranteed rate of interest and the guaranteed cost of the insurance rates, coverage will expire in year 50, month 12 which is prior to the maturity date set forth in the contract."

In the 50th year I will be 77 years old.  Not sure what the above statement means???

Quoted: I've been reading through all the "fine print" on my policy and discovered that if I close my policy now I will have to forfeit about $600.00 of the $4700.00 that would be paid back to me.  Of course if I wait about 6-10 years the "forfeit" amount drops significantly.   Should I go ahead and close the policy, up my term if need be, take the hit and invest the remaining cash else ware?

cash out, walk away.  chalk up the $600 to a learning experience.  waiting out the 6-10 years of time-value on that $600 is going to just cost you more.  

invest the $4700 in a balanced mutual fund.  if it returns 9-10% you'll *almost* be even after just one year.  you'll definitely be even after two years.  

ps:
down the road, you can apply a few general principles to investment opportunities: if you don't understand it, and it can't be explained to you in 2 minutes using 4th grade level English, you don't want it.  an EIA (equity indexed annuity) is such an example of what you don't want.  and anything with a "load" attached it (front or back) is something you don't want.  anything that is costing you more than 1% per year in ER is something you don't want.  finally if something has to be "sold" to you, and it otherwise doesn't "sell itself", it's probably not something you want.  

ar-jedi

What that means ("based upon planned...) is that given your current premium, your policy may no longer be in-force (no death benefit) at year 50.  Your policy allows you to stop payments all together with remaining cash value paying the premium until there is no more value (but all the while keeping you insured at face value until that time).  Conversely, you may be able increase your premium payments to build more cash value.

With the amount of info posted, one could not advise you either way to surrender your policy or not. (sorry ar-jedi, I disagree with you here)

Although your guaranteed rate is 4.50%, what is the current rate?
What's your current cash flow?  What's your asset allocation now?
What do you want your life insurance to do for you?  (Is this your only life insurance policy? Do we assume, since it's only for $100K coverage, this is not funding some irrevocable trust in combo with some additional cash value policies?  This is not funding some other business need?)
With the premiums you pay now, do you want a death benefit if you die before 77?

Answer yourself some questions, do some calculations, maybe ask for an in-force policy illustration, before you decide if the surrender charge is worth it.

James,

I don't know what the current rate is.  I tried to access the web site but it was having problems.  I also have a $450,000 term policy.  The universal policy was the first life insurance I had.  It was sold to me as a "savings acct. with a death benefit".  It's not for anything but a simple death benefit.   It's not for business or trust needs.  I have a 457,Roth and excellent pension plan.

Quoted: if you don't understand it, and it can't be explained to you in 2 minutes using 4th grade level English, you don't want it.  an EIA (equity indexed annuity) is such an example of what you don't want.  and anything with a "load" attached it (front or back) is something you don't want.  anything that is costing you more than 1% per year in ER is something you don't want.  finally if something has to be "sold" to you, and it otherwise doesn't "sell itself", it's probably not something you want.

That's a fantastic standard, ar-jedi.  I've learned this one the hard way, and that's the standard I'm following now too.

Correct me if I am wrong, but I think your policy consists of ART. (Annually Renewable Term).  Does the chance of you dieing increase as you get older?  YES.  So the Cost of Insurance COI is going up each time your ART increases, which means less is going in your "seperate account"  

Example.
You pay 600 dollars a year total.  You are currently 30 years old.  Small chance of you dieing so cost of insurance is 200 dollars, which leaves 400 dollars (outlay) to your "savings"

You are now 40 years old... Annual REnewable Term goes up so your cost of insurance is 400 dollars, which leaves 200 that goes in your savings.

You turn 50, Cost of Insurance is 600, which leaves $0 into savings.

You turn 60, Cost of insurance is 800, who is going to pay the extra 200 dollars?  You or your SAVINGS account is.  Eventually your savings goes to zero and the insurance asks you to pay more $ to keep policy in force.  See these policy's quite often.

This is damn near the easiest way to explain how this product works, and is what we at Primerica do.  It's just the TRUTH.  Please send all bashing to my private email.

orig. poster said he has universal.

term has no guaranteed interest rate.

Quoted: Example. You pay 600 dollars a year total.  You are currently 30 years old.  Small chance of you dieing so cost of insurance is 200 dollars, which leaves 400 dollars (outlay) to your "savings" You are now 40 years old... Annual REnewable Term goes up so your cost of insurance is 400 dollars, which leaves 200 that goes in your savings. You turn 50, Cost of Insurance is 600, which leaves $0 into savings. You turn 60, Cost of insurance is 800, who is going to pay the extra 200 dollars?  You or your SAVINGS account is.  Eventually your savings goes to zero and the insurance asks you to pay more $ to keep policy in force.

ok, i'll play.

i'm 30.  i pay $200/year.  i invest $400/year, and we'll use an average return of 8.5%.  
at 39 i have paid 10 x $200 = $2000.  i've invested 10 x $400 = $4000.  it's grown to $7,342 over the 10 years.

i'm 40. i pay $400/year.  i invest $200/year, and we'll use an average return of 8.5%.
at 49 i have paid 10 x $400 = $4000.  i've invested 10 x $200 = $2000 PLUS the original $7,342.83.  that grows to $19,821 over 10 years.

i'm 50.  i pay $600/year.  i can't invest anything, but i still am making that average return.
at 59, i have paid 10 x $600 = $6000.  i've invested no additional money, but after 10 years i have $44,815 banked.

i'm 60. i pay $800/year.  uh oh, it looks like i need to dip into that savings now, to the tune of $200/yr.   well, screw it -- let's just pay the entire $800/year out of that savings.

SURPRISE!  

at 8.5%, each and every year that $44K goes up by nearly $4K!  so even after i pay $800/yr for LI, i'm still ahead of the game and the balance is increasing!

i'm 70.  i pay $1200/year.  i'm still making money.
i'm 80.  i pay $2000/year.  i'm still making money.
i'm 89.  i die.  i leave a huge sum of money to my children and grandchildren.

---

the ONLY thing that the above "plan" requires is that you don't actually spend the money you "saved" up front.  this is the hard part.  the nice part is that it is your money, in your control, and can be bequeathed to your desires on your schedule.  for example, you don't actually have to die to fund your grandchild's college education.  you just write a check.

ar-jedi

Ar-Jedi, are you sure you get that money in the savings account when you die?  Read the fine print.   Depends on option 1 or 2, but the premiums are nearly double.

Don't count those dividends you are receiving as part of your return either....they are just an overpayment of premium.

Life insurance should never be an investment.

Quoted: Ar-Jedi, are you sure you get that money in the savings account when you die?  Read the fine print.   Depends on option 1 or 2, but the premiums are nearly double. Don't count those dividends you are receiving as part of your return either....they are just an overpayment of premium. Life insurance should never be an investment.

sorry, i think we are crossed up here.  that is exactly what i am saying -- pay for insurance you need and invest the rest yourself.  mixing insurance and investing just makes the insurance company richer.

ar-jedi