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>My husband and I were foolishly persuaded a few years ago, before I knew any better and without thoroughly researching the subject, into buying two whole life insurance policies. We have been paying monthly premiums on them since May 1999. At this time, what are our options as far as getting out of this by either converting to term or cancelling altogether? Will we lose all the money we've paid in premiums so far? I'd like to know where we stand and have more facts before I contact the insurance agent. Thank you. >


1) Locate the “policy numbers” of your two policies.
2) Locate the direct-to-home-office 800 number for policy service.
3) Call the number.
4) Follow the directions to press the correct sequence of coded numbers to get to policy service.
5) Ask the human for the “Cash Surrender Value” of the two policies as of the day you call.
6) Say, “thank you”. Hang up the phone.

Depending on your answer:

If the cash surrender value is zero:

1) Go find an inexpensive term life insurance policy, apply, give blood, pee in the cup and then wait until the new policies are actually issued and paid for.
2) Stop the monthly payments on the two whole life policies.
3) You will get warning letters to pay your premiums.
4) You will get a call from your agent, who has been told to go and talk you out of getting rid of the whole life policies (many agents lose vacation and club bonus credits if people drop their policies).
5) 30 days after you don't pay, the insurance polices cease, end, finish, kaput.

If your cash surrender value is any positive number:

Add a step 2a to the above…
2a) Call the insurance company home office, say “I want to cancel my policies today”. They will send you a form to sign to cancel the coverage. Sign it, then they will send you a check for the cash surrender value as of the day they receive the cancellation form.

Step 4) will still apply, but you avoid 3) and 5)


“Conversion” usually works on term insurance to whole life, but not whole life to term. Whole life does have a “extended term insurance option”, where you can use your cash value to keep term insurance going for a period of time (until the cash runs out), but the options cost is not very competitive.

If you can't qualify for new term insurance, then you should keep both whole life policies. Do not cancel the whole life until you have the new policies.

The life insurance industry has a law called “replacement law”. It where an agent has to ask you the following question (and you have to answer correctly) “Is this new coverage going to replace any existing policies?”. Please listen to this – the law exists to keep agents from churning new commissions on constantly replacing existing policies and to avoid someone from moving into a worse position then they were before. Going from whole life to term is considered going from better to worse (I did not invent this) in the industries eyes. You are going to have to make your decision and stand by it, despite legal notices, scary forms, etc. that you will have to sign. You are going to have to say “this is my decision, not yours, leave me alone”. State insurance departments will send questionnaires out on a random basis in the efforts to catch the crooks. Enough said.

Lastly, take out a piece of paper, divide into four quadrants. Across the top, write “Pro's” and “Con's” and down the side put “Term” and “Permanent”. Make some copies of the form. Find a die-hard permanent life professional and have then fill it out. Also find a die-hard term insurance fan and ask them to fill it out. Don't listen to anybody and don't cancel the whole life until you have both forms filled out. Then make a decision.

Good luck!

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