Stinky wrote: Wed Sep 03, 2025 8:34 pmYou say that you’ve paid $27k in premiums, and have an account value of $20k. I clicked through on the image you provided, and didn’t see any mention of your surrender value. You mention that surrender charges drop of in six years, so I expect that your current surrender value is somewhat less than $20k. For the purpose of discussion, let’s say that the surrender value is ($15k). (I’ve used this $15k estimate below. When you get a quote on what your actual surrender value is, fill in the correct number).
I absolutely agree that you should drop the policy. There’s no reason to keep throwing good money after bad on a product that you don’t need.
You have a couple of options for getting rid of the policy –
— Just surrender the policy, collect your ($15k) surrender value, and invest the proceeds per your desired asset allocation. Then you’re done with this whole thing.
— Do as poster Harmanic suggests, and do a 1035 exchange into the Fidelity variable annuity. Here’s a link to the product. https://www.fidelity.com/annuities/FPRA … y/overview
The benefit of exchanging into the annuity is that you can earn ($12k), which is the difference between your $27k basis and your ($15k) surrender value, income tax-free. If your marginal tax rate is 25%, that’s ($12k) X 0.25, or ($3k) of tax savings.
The bad news about the annuity strategy is that it will take several years, maybe most of a decade, for a ($15k) variable annuity to grow to $27k. You’ll need to decide whether it’s worth your tax savings of ($3k) to monitor this annuity for years to come.
Post back with questions.
Thanks for weighing in Stinky.
I added a few more images to the previous link that was from my policy packet back in 2016. I thought the surrender value was written on this 2nd image which is now inserted below:
So if I’m understanding this correctly, I would only receive 11k at this point.
I don’t think it’s worth the stress of having to deal with an annuity for a decade to save $4k.
If I take out the 11k, this is tax-free correct? I literally get all the 11k?
Is there any consideration that I need to pay at all to the long term care? I don’t quite understand how that all works but I thought it was mainly something you buy when you’re closer to 50 or 65. Does this policy give me access to the 500k value for long term care or is it typically some percentage of that 500k? Even if I had to pay 0.6% income tax for my state requirements, it seems like I would stand to ‘save’ a whole lot more by investing $250 a month for my foreseeable future into my 3fund portfolio.
I have a phone call on Friday with the ‘FA’, better known as salesman at this point, and need to wrap my head around the situation so he can’t talk me into staying.
An additional question I have would be that my brother was also signed up for something similar to ‘dodge’ the LTC tax, his income is much higher than mine but he’s not nearly as invested as I am. His money is mostly in HYSA. Regardless, it seems like a financially poor option to have an IUL as well. Does it make sense to also surrender his plan? He might be getting back 0 since I believe it’s only 2 years old but it’s better than paying into a trash heap.
