My wife has bought a whole life insurance policy as an investment before we met. She is currently in her early forties and she has been paying into it for roughly seven years.
I do not believe that life insurance makes a good investment, especially for us, as we have no need for actual life insurance. As such, I'd like to get rid of this policy, and I will schedule an appointment shortly with the "investment advisor" that sold her this insurance. Unfortunately the documents I have are very opaque: there's very little detail on fees/penalties, how the premium is allocated, or how the cash value grows over time. (I suspect this opaqueness isn't that unusual for life insurance products.) I'd like to arm myself with as much information as possible before that meeting so that I am not at a disadvantage.
Is best to just cash out the policy? Or is there a "break even" point somewhere because of the actuarial tables? (I am skeptical that this would be the case, but want to be forearmed against such an argument.)
Are there tax consequences to cashing out the policy? If so, would it be better to just stop making premium payments instead of cashing it out? (My understanding is that with her current product if you stop making premium payments it reverts to the amount of coverage that could be sustained with just the dividends from the current cash value.)
In short, if you are already several years into a whole life policy, what is the best way to get out?