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9/22/2017 12:11:25 AM
Posted: 9/27/2005 8:01:30 AM EDT
The wife has a life insurance policy with a fairly large cash surrender value. We have no debt, no kids, not much need for life insurance (that I can think of). This was all paid with post tax income, so there should be no tax penalty, AFIK....

We are kicking around cashing it out to put the $$$ in our retirement investments.

Good idea, yes or no, why?

What investment? IRA? Roth IRA? Mutual Fundages?

Thanks in advance.
Link Posted: 9/27/2005 10:39:57 AM EDT
The cash benefit amount has likely grown tax free (deferred), so cashing it out will probably have a tax issue.

How much money are you looking at? If it's a lot (say over $50k) you would probably be best served talking to a financial advisor. I'd recommend a fee only advisor, one who doesn't sell anything.

If it's less, focus on paying down debts, setting aside a cash reserve (6 months' expenses minimum) in a savings account, stashing a couple thousand dollars in actual green cash in a safe place, funding a Roth IRA.

If you have any money left over after that, then look at making actual investments (stocks, real estate, etc.)
Link Posted: 9/27/2005 12:20:25 PM EDT

Originally Posted By tax_monster:
The cash benefit amount has likely grown tax free (deferred), so cashing it out will probably have a tax issue.

How much money are you looking at? If it's a lot (say over $50k) you would probably be best served talking to a financial advisor. I'd recommend a fee only advisor, one who doesn't sell anything.

If it's less, focus on paying down debts, setting aside a cash reserve (6 months' expenses minimum) in a savings account, stashing a couple thousand dollars in actual green cash in a safe place, funding a Roth IRA.

If you have any money left over after that, then look at making actual investments (stocks, real estate, etc.)



Considering the tax free growth, I am guessing that portion only, would be taxable? I have a financial advisor, but he really didn't say too much about the insurance policy. Maybe he has enough of my money to play with... It is not over 50K. I have no debt, and I have cash reserve, savings, IRA, Mutual funds, etc. I am hoping that if I throw it in a qualified investment, it would be like a rollover and have zero immediate tax consequence.

I am just concerned that the cash value of the insurance policy isn't doing much for us.

I have also not paid much attention to it. I will have to put it under the magnifying glass tonight....

....and I am not planning a class 3 investment....
Link Posted: 9/27/2005 7:31:43 PM EDT

Originally Posted By wildearp:
....and I am not planning a class 3 investment....




Well, then, what good are ya?
Link Posted: 9/29/2005 5:44:06 AM EDT

Originally Posted By tax_monster:

Originally Posted By wildearp:
....and I am not planning a class 3 investment....




Well, then, what good are ya?



I ain't as good as I once was, but I am as good once, as I ever was......
Link Posted: 9/29/2005 8:35:56 AM EDT
I'm really not sure there is a way to roll over your funds from the life insurance tax free, unless you roll it into another life insurance product, which I am generally against (except for term). Depending on the taxable amount, you might just want to take the hit and pull the money out.

If it's quite a bit, then there are variable or universal life insurance products that allow a greater range of investments, but the fees and other costs aren't low.

If you're looking for investment classes, buy things that are at cyclical lows. To me, that means commodities, such as gold, oil, base minerals and the grains.

Then again, if you want to take a good amount of risk in exchange for a hefty interest rate return, go down to your local "we finance anyone" car dealers and see if they need more lenders for their buyers. Get 10-20% down on a car and 27% on the balance for 3-5 years.
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