Your Personal Finance Questions – Should I cash out my life insurance coverage because its cash value has fallen?

Q I am 74 years old and I pay € 198 per month in a unit life insurance contract worth € 157,000 in the event of death or disability (non-indexed). I have seen the cash value drop from € 21,000 to € 9,000 now. Should I cash it in or continue to pay the monthly installments?

A It appears the policy you have is called a unit-linked whole life insurance policy, said Richard Jones of Aviva Life and Pensions. This means that the policy will pay (assuming the required premiums continue to be paid) for the full amount of € 157,000 upon your death.

This type of policy is generally more expensive than other term life insurance policies available because of the guaranteed payout on death. However, you may find that this policy may be subject to what is called a policy review.


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