You may have heard that term life insurance is generally a better value than whole life. All else being equal, the premiums on a term life policy tend to be quite a bit lower than those on a whole life policy with the same death benefit. That means new insurance shoppers can generally get more for bang for their life insurance buck by choosing a term life policy over a whole life option.

The calculation can be a bit trickier, however, for those who already have a whole life policy in place. Many young people are sold whole life policies by overzealous salespeople, and those consumers may end up with policies that cost more than they should have. Insurance salespeople may even sell whole life insurance to those who do not need the coverage – like young working adults with no dependents.

If you are one of those consumers with a whole life policy, you may be wondering what to do with it. Should you cash in the policy and use the proceeds to purchase term life insurance? Should you let the policy remain in place and allow it to continue building value? The answer to these questions is not cut and dried – it requires looking at your individual policy and making some assessments.

How Much Have You Invested in the Policy?

If you are thinking about closing out a whole life policy, you may want to look at how much you have put into that policy over the years. Get out your annual statements and your checkbook and look at the premiums you have paid through the years. Then look at the value of the policy and how much you would receive if you cashed it out today.

If the policy is worth a great deal more than you have put in over the years, it might make sense to hang on to it. Although life insurance is generally not a good investment, there are programs that do quite well. If you are happy with the performance of the policy, it could make sense to keep it.

Do You Need Life Insurance

Salespeople often tout whole life insurance as a great investment – even for those who do not need life insurance. That means you may have a policy you do not need to protect your family. If you do not have anyone who is dependent on your income, chances are you do not need life insurance at all – either term or whole life. It is important to assess your situation and determine whether or not you even need life insurance coverage. If not, cashing out your existing whole life policy and investing the proceeds elsewhere can be a smart move.

Are You a High-Risk Insurance Shopper?

If you do need life insurance, you would need to replace that costly whole life policy with term life coverage. If you are young and healthy, that should be a relatively simple endeavor – and one that could save you hundreds of dollars a year in premiums.

The task of replacing your existing life insurance policy can be more difficult if you have a condition or personal habit that makes you a higher risk. If you smoke, or if you have a family history of heart disease or cancer, you could find that getting a new policy will be difficult.

If you do decide to ditch your whole life policy, you will want to make sure you have a good term life policy in place ahead of time. This will give you a chance to apply for coverage, take any required physicals and get the coverage in place before you make your move. Term life coverage is generally the better deal, but you want to make sure you do not end up uninsured.