A woman in her 50s, who has no family or children, is facing a dilemma regarding a life insurance policy that her father bought for her when she was a child. The policy, with a cash value of $12,000, is set to renew in September, and she is considering cashing it out to invest in a SEP or Roth IRA, as well as Treasury bonds or a high-yield savings account.
However, she is wary of advice from the insurance company, as she believes their priority is their own best interest. After a hospitalization due to a feral cat bite that wiped out her savings, she is looking to rebuild her finances.
The woman seeks advice on the best way to cash out the policy and maximize her investment options. She is considering cashing out in two chunks over two years to manage tax exposure. She also wonders if she can max out both a SEP and Roth IRA, and what to do with any leftover funds.
Financial experts advise caution and suggest considering the long-term prospects of the life insurance plan before making any hasty decisions. They recommend exploring high-yield savings accounts, CDs, Treasury bonds, and money-market funds as low-risk investment options.
Ultimately, the woman is encouraged to take her time, seek third-party advice from a CPA, and carefully review all her options before deciding whether to cash out the policy. With no beneficiaries and no immediate need for the policy, she may find it more beneficial to invest the funds elsewhere.