How can I convert my Life policy to Paid Up, retaining Maximum Coverage, No future Premium?

Question

I presently have a Life policy with Northwestern, $1,250,000 death benefit, $215k net cash value
policy date April 1996 . . (16 years)

I'm 60 and retired . . .want to bring policy to a paid up status, retaining as much life insurance as possible, and have no future premium outlay. 

One synopsis they have shown me is:
I'd have $835k approx of life ins, and my cash value would continue to grow . . 
at age 80, cash value would be $500k and death benefit would still be at $835k

Now I realize it's nice to have a growing nest egg . . and I'm pretty sure it's based on best case scenario and existing rate of return on investment. . . . 

My thoughts are this: . . I am thinking more along the lines of going for straight death benefit to my family as I never wanted to think of it as a personal investment, but a gift to family. . I'm sure Northwestern would love to use my money for the next 20 years and essentially pocket the $500k which is a great offset to the pay out . . 

I'm conflicted between Northwestern maximizing their stake while minimizing my death benefit.
But also like the idea of cash value maintained or growing in case of emergency

Is it customary to use this as a tool for additional money in old age ?
Do you think I'd be better served to look at it in another way ?
Does it make sense to shop around with other companies ?
What are some pitfalls I need to watch out for ?

John Hancock is offering me well over a $1 million in death benefit & $30k a year Long Term Care.  The cash value of course erodes as a result of this, and I know they will burn through a $38k premium
to convert this policy

Any thoughts?

Anonymous · Accepted Answer

You will have to discuss this with your agent, who knows the policy specifics. 

Look, when you're buying a 'whole life' policy, the reason the premium stays the same, is because your "cash value" adds to the pure insurance part, and the TOTAL becomes the death benefit.  That means, as the savings account (cash value) part becomes bigger, the actual INSURANCE part, gets smaller and smaller, until the policy 'matures' and the cash value equals (or exceeds) the stated death benefit.

Is it CUSTOMARY to pay tons of money into whole life insurance, to use it as a savings account?  Yes.  But it's certainly not SMART, when you calculate what you've paid in, and your "return" on that savings account.   Most people in your age bracket looking at life insurance, are really using it as an estate planning/preservation tool, not a savings account.   That life insurance passes to your beneficiaries OUTSIDE the estate (meaning, any of your creditors, including possible medical providers) can't get their hands on the money, and in most cases, the money is "tax free".  

Regarding the JH comparison, not knowing ANY of your financial situation or even your marital status, it's impossible for anyone here to give any kind of valid opinion.  I will say, however, that $30K a year in long term care coverage, isn't going to give you any kind of estate preservation - it's likely to be less than HALF of what your actual costs will be.

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How can I convert my Life policy to Paid Up, retaining Maximum Coverage, No future Premium?

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