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Originally Posted by BigDeanEvans
Honestly, i have no idea. All i know i can borrow against the money if i ever need it and when i die it goes in a trust for my family. At this point i doubt I'll ever need to borrow from it. I have multiple 7 figs that's liquid (stocks, cash & gold), and i live pretty frugal but i dont want to toss away 60-70k for nothing either.
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Talk to the person who helped set that up for you, and if you can't get a hold of them or don't like their explanation then find someone new. It's not for nothing, if you die your hiers will be paid. It is making money just like your other investments, actually it is doing better than cash which loses about 3% a year because of inflation. If you have a VUL then you have more stocks via the mutual funds you own in that policy.
Since you can borrow against it then it is either a whole life or Variable Universal Life (VUL) policy. There are a few differences between the two, with the biggest being the whole life is more of a fixed product, where the VUL is funded with mutual funds so it can go up and down drastically. They both give you a cash balance which is what you can borrow against and they both provide you with a death benefit. Don't "cancel" the policy or you could be hit with some tax implications, unless you really don't need it but I would talk to an accountant first before doing that. BTW when you die, unlike the majority of your other investments, the death benefit from life insurance is not taxable as income to your hiers.
What a lot of people don't understand about permanent life insurance is the "living benefits" built in because of the cash value. Where as with term life there are no living benefits, its based on you die, your hiers get paid. Well, there is exceptions if you are terminally ill and about to die and you have a term policy there are companies that will pay you the money and take over your policy but it is at a pretty big reduction to what your death benefit is.