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Insurance Planning Question – Benefits

 

Q: I had a question in regards to a caller Sunday 2/3 about cashing in Whole Life Met Policy. Like the caller, I bought a small $5,000 policy in 1972 – age 21. I reinvested the dividends and it’s now worth approximately $13,000. I hear on other financial shows that if I die, my beneficiaries would only get the face value of the policy. When I called Met Live, they said I would get the full $13,000. What is the truth?? In addition, if I cashed it in, I understand the only portion not taxable would be the portion I paid. Does this mean the current value less my premiums would be the taxable portion?

A: I cannot speak for certain without seeing the policy and its specific details, but with the facts presented and as a general rule of thumb, it sounds like your heirs would get $13K as a death benefit, tax-free. If you took the money out before death, then the difference between what you contributed and what it is worth today would be taxable.

Again, we cannot know for sure without seeing the policy, but you must believe what Metlife tells you as they know the policy best of all.


 

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