Buzzman---it sounds like you are trying to determine what to do in a lot of different areas.
Cash in your whole life, buy some term, take the proceeds from the WL and prepay a funeral, use the extra money (yes, some of the WL policies do have enough cash to do that)and reduce some monthly expenses all at the same time.
Not knowing what your particular financial picture looks like, I will give you my $0.02 worth on a few ideas....
IF you prepay a funeral, you can do it in a way that gaurantees the funeral cost will be covered in the future regardless of the current cost when you die..today or 25 years from now..ask the Funeral Director for Details. This route can be a good idea.
IF you feel you need/want some additional life coverage, you can do a "tax free" exchange of your current policy to one with a higher death benefite, and possibly reduce the out of pocket costs...NOTE: Make sure you do this with a reputable company that will gaurantee the death benefit even after your Cash Value is used up!
Warning: Did you find out what the taxable amount of the current policy will be when you cash out of it? Even "small" policies can accumulate large Cash Values..
Personal Opinions: -Most term policies expire before you do, so if you want to make sure there is some insurance inforce when you die, don't buy term insurance.
-The "wise investors" tell us that "whole life" policies are a bad investment vehicle, that we should instead "buy term and invest the difference." I understand the principles of that.
I understand that principleas well---Life insurance was NEVER meant to be an investment....but when they start to build up value, they are picked on as a bad investment. Comparing apples and oranges.
At age 18, the "difference" between the premiums for same amounts of term and WL, IF THEY WERE Invested religiously......would give you a sum of money that wouldn't really provide you with much of a retirement fund at 65....especially with the way the Stock Market has performed.
If you want to leave TAX FREE insurance dollars to someone after you are gone, and the premiums for it do NOT take anything away from your life style, I say go for it.....Millions of Dollars of Life Insurance are sold each day for that specific reason..
Everybody has their own reasons to do or not to do anything with insurance...there is no cookie cutter right answer.....I hope my opinions were more advice oriented on where to get some info to help you make a more informed decision. Tim
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