Nov 252008

This isn’t some kind of deep, soul-searching blog post.  Please don’t let the title fool you.  I’m kicking around a financial decision and I could use some advice/input from my friends.

I have two $10,000 life insurance policies that my Mother took out when I was in elementary school and passed on to me.  If I’m reading the paperwork correctly, at the age of 36 these policies that are probably close to 30 years old have amassed a whopping cash value of $596 each.  I pay $18.20 quarterly for each of these policies, so I’m shelling out $145.60 a year to maintain them.

I have PMI on my mortgage that is paid monthly, so if the worst were to happen the house would be paid for.  On top of that I have a sizable life insurance policy through work that I pay extra to have increased.  It is set up to be split between Alex, Krystalle and Jareth if.  It wouldn’t be enough to set them up for life, but the house would be paid for and Krystalle could make sure all of my debts were paid off and they would all still have a decent cushion for a while.

I’ve always looked at the two $10k life insurance policies as my “funeral” policies.  That money would probably cover the funeral and subsequent mad party I have requested should I shake off this mortal coil.  In the grand scheme of things, that money is a pretty small drop in the bucket and won’t come near covering what my other policies do.

All of this leads to my question – If you were me, would you continue paying for the two policies or would you cash them in and use that money to pay down debts (or, more likely, pay off the new debt incurred by Christmas)?

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