Be very kind and very grateful
My mom and dad took out a whole life insurance policy for me when I was born. The cash value is $2,500, and my husband and I want to cash it out and put the money toward paying off debt. We already have larger term life insurance policies in place, but I'm worried that doing this will offend my parents. What should I do?
I think the real question is how many toxic things will you do because you're afraid you might offend them. Whole life policies are financially toxic. They're a bad product, and keeping it for no better reason than it might hurt their feelings a little bit isn't much of a reason - especially when the alternative is paying down debt and getting your financial life in order.
I know this is mom and dad we're talking about, so you'll have to be nice about everything. But at the same time, your parents have to realize it's your life and you make the decisions. Try sitting down with them and gently explaining that while you appreciate and love them for their generosity, you're going to cash it out and use it to get out of debt. Let them know you're not wasting their gift, and that you're using it to make a positive impact on your lives.
You're not doing anything disrespectful, Laura. Just be very clear about the reason and loving with your explanation. Then, if they chose to become a little emotional or resentful, that's on them. If they get really upset and want the money back, you can do that too. But getting your financial house in order is much more important than hanging on to a bad financial product you don't need in the first place.
Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids and is out now. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.