Two years ago, my husband retired and we decided to cash out our whole life insurance policies that we took out many years ago. I’m curious whether I can shred all the old paperwork since we no longer have these policies. Trying to lighten our paper load! Thanks for any advice.
If it relates to income, I’d keep supporting docs as long as you keep all other tax docs for that same year.
That makes sense. I do have the statements with the income from the cash out. I will put in the file with that year’s income tax and shred the other non-income related paperwork. Thanks for your reply.
Side question - did you feel you got your money’s worth by using this kind of life insurance?
We were talked into it about 35 years ago by the insurance agent who provided our homeowners insurance on our new home. We were novices and had no idea what we were doing. I’m sure he received a commission on selling it to us. Well, we’re both alive, so didn’t use the death benefit. The cash amount was a nice chunk of change to get back, so we don’t have any complaints at this point. After listening to Clark for so long, we certainly wouldn’t repeat this purchase but we don’t feel it was a problem to have it all these years.
Yep that confirms the old saying that life insurance is never bought it’s always sold. I’m glad it has worked out well for you all the years.
I can tell you my opinion. In what I believe was about 1976, I bought a Whole Life paid up at age 65 policy fron a respectable insurance company. It was GELICO (Government Employees Life Insurance Company) a division of GEICO. I paid something like $13.58 a month for years and years and years. In the early years I was late with a payment or two and sure enough, the salesman sent me a packet of per-addressed and stamped envelopes for payments to make sue I didn’t have that excuse for default.
GELICO got bought out by another company and then another. I had those payments automatically taken out of my checking account for decades.
There was a loan option which I had taken for a couple hundred of dollars years back.
Then a few years before I turned 65 I got a mailing form the company which currently held the account. It said there was a discrepancy between what I was being charged (or I guess collected) and that they had changed my policy from a "paid up at age 65) to a term policy, which looked as though I would have to start paying after age 65. I filed a complaint with both my State and their State insurance Commissioners and my policy was changed back. I don’t know if the 1st change had been a mistake or scam they were pulling off but at least I got what I signed up for.
I decided to pay up the policy and take the proceeds a few years early. OK, so “paid up age age 65” to me meant when I turned 65 in October. Their answer was “December in the year you turn 65”.
When I cashed out I took my approximately $8,000 and spent it. Was it worth the hassles? Not for me. It turns out that I never got married nor died, so it was not worth the loss of interest I could have made by investing it.
I have hurricane insurance in an area that has never had a hurricane hit in recorded history, yet could at any time (a horrible hurricane hit 300 miles from me years ago).
Only once did I see an insurance policy pay off almost fully. My Dad got a house full of furniture and got what Clark calls ‘croak and choke insurance’. He paid one payment and died of a heart attack. Certainly not the way you want free furniture but free none-the-less.
Ok now the mathematician in me is curious. $13.58 a month starting in 1976 and you paid for how many decades and got paid $8000 when? I will tell you what your rate of return was… and what a conservative 60/40 stock and bond investment would have garnered you. I have so many great memories from that Bicentennial year by the way, good times!
I ran $13.58/mo for 43 years @ 8.3% interest through MoneyChimp and got $66,561.90.
My Dad used to say “notice how the biggest downtown office buildings are insurance companies?”