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Cancelling Ameriprise whole life insuance?

I can no longer afford the 325 a month for whole life insurance. I have approximately 25K cash value. I can get a term policy for around 225 a month. Do I lose the 25K value? Can I have my dividends on the 25K pay my premium? It seems to have a pretty decent return. It says guaranteed rate of 4% return. Last years return $15,017.03 Additions PremiumPayments $3,900.00 Total Additions $3,900.00 Withdrawals Cost of Insurance -$1,731.26 Total Withdrawals -$1,731.26 Change in Value Fixed/ Variable Account Results $4,522.01 PremiumExpense Charges -$195.00 Total Change in Value $4,327.01 Ending Value $21,512.78 I need some serious help. I don't know what to do! The policy is about 12 years old. My husband was the bread winner at the time this is no longer the case. The policy is for 350K he is 44 and a smoker. I get 3 times my annual income from my work for about 15 bucks a month (approximately 216K all together) . The 350K policy has a rider that covers me as well. I am 42 non smoker and pretty darn healthy. My husband took huge paycut after being on unemployment for 18 months. This economy sucks!

Public Comments

1. You should be able to get term for a lot less than $225 a month. How much are you buying and for how long?!?!?! 30 year level term for 1 million dollars for a healthy man in his 30s should run about $100 a month. Cash out the whole life and move on. It is a rip-off. You are going to lose moeny on it. That is why you don't buy it. Cash it out and invest it in an investment vehicle (mutual funds) not insurance.
2. You should definitely talk with an experienced agent. I had a similar contract and my current agent helped me transition over to New York Life. Frankly, the prices were better with less risk (NYL has been around for forever). All companies do have a surrender fee so you may not be able to keep all of your cash value if you cancel. Just looking, it appears that the insurance costs are rather high. And I'm not sure what a "Premium Expense Charge" is but that sounds like a bogus charge. It sounds like you have a universal whole life policy. The way that policy is designed is this: The administrative costs, the cost of insurance is low up front which makes it attractive at first. Cash value is built up for the first 10 years, then the costs go up so less cash is accumulating.
3. 1) You don't have a whole life plan. You have a universal life plan. A whole life plan wouldn't give you the detail you noted above. 2) A $350,000 20-yr term policy for a smoker is about $140/month, but you'll note that is about the same as the cost of the insurance they're charging you internal to the policy. 3) You could lower the amount you pay on the current plan if you wanted until things got better. You could also stop paying and have the cash value keep the policy going. Not saying you should do that, but it's an option.
4. You should get a 20 year level term insurance and add your husband as the spouse rider. With the information you given, it would cost about $200/month with $350k coverage on both of you (for a total coverage of $700k). After the term poicy is issued, there are 2 things you can do with your whole life policy: 1) You can cancel your whole life policy and take the cash surrender value, which is cash value minus the surrender charge, or 2) do a 1035 exchange and move the cash surrender value into an annuity. Annuity can pay a death benefit if you never touch the money or pay lifetime income when you begin withdrawing money. The death benefit for an annuity will always be the minimum of what you put in or the maximum value of the annuity. For example, if you put in $20,000 into an annuity and the value is $15,000, your death benefit is $20,000. If the value of your annuity is $30,000, then your death benefit is $30,000. When you start withdrawing money from the annuity, you lose the death benefit, but the annuity will pay lifetime income to you. Here are some interesting information about whole life insurance in general: 1) You know its more expensive than term. When you were 30 and your husband was 32, it would of cost about $122/month for a 20 year level term, saving you about $200/month. 2) You know it already has low interest rate of 4%. If you saved the $200/month during the 12 years and invest it in mutual funds, which has an average annual return of 10.99% since 1980, you will have about $59k right now. Or with 8% return, about $48k. Are these interest rates guaranteed? No, but that how's the US stock market has historically perform over the long run. 3) If you want to take money out from it, you will be borrowing and paying interest rate of around 8%. With mutual funds, the money is yours. There is no such thing as borrowing. 4) If you die someday, the company keeps the cash value and pays the death benefit (unless your death benefit option in your policy reads option 2 or option B, then death benefit will include cash value). With term insurance, if you die during the 20 year term, your beneficiary gets both the life insurance and savings. If you die after the term, at least you will be leaving lots of money behind to your spouse.