Quote:
Originally Posted by supafamous
It might be a huge waste to keep paying it as well and you may want to cut your losses now rather than keep paying. You're on the hook for another $33k - money that could go to something else whether it's paying off other bills, cheaper life insurance, or being invested with much higher returns. Whole life policies are generally bullshit and only suitable for people who need forced savings (and you do seem like you need to be forced to save).
You may be better off cancelling the policy, taking the money out and buying a term life policy (if you even need that since you don't have dependents). If the mortgage is the problem then get a 10 year policy that's just enough to pay it off your portion so your parents aren't on the hook - that would be a really cheap policy even though you're a smoker. You may even be able to convert your current policy to a term policy.
I'm not a professional (of course) so you'll need to talk to a professional to see how the numbers play out but I'm not sure keeping it is the right play here.
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To add a bit of perspective - whole life insurance policies are definitely not "generally bullshit." They are in fact one of the most powerful tools available to move wealth between generations in a low risk and tax efficient way, and actually can produce very significant returns if you measure them against funds received by beneficiaries, net of all taxes.
However, they are also very profitable to sell, and therefore they have become the biggest square peg ever to be pounded into a round hole. There are a TON of good reasons to buy whole life insurance, but for a younger person who does not have a family, and does not have fully funded TFSA/RRSPs, I'd struggle to see the logic.
With that said, getting in early does provide for a significant upside in overall return and I have seen many clients later in life try to buy them once they have wealth and beneficiaries only to find they are being medically declined.
All this to say, I am not sure that buying one (or two) was the right choice, but now that you have them, I'd think long and hard before cancelling them as you have at least locked a low cost of insurance in.
-Mark