Annuity & Life Insurance (student loan, debt, financial, $40k)

[fisher33]

My husband's gdad and dad bought him 6 whole life insurance policies plus one annuity. I had a small one too. Due to suggestions from his dad, mine, and our financial couselor (Dave Ramsey financial counselor), we've cashed out all but the annuity and the large $250k life insurance policy. We used the $ to pay off cc debt (now debt free except the car and a small student loan) and to live on. Husband's dad suggests we keep the large policy and the annuity. Our financial planner says we should cash them out. I trust our financial planner more and want to do what's right, but don't want to upset dad-in-law. Suggestions?

Here are some specifics on the policies:
Annuity -
- date issued 1982 $8500 single premium
- balance is $40k
- earnings for year $1,300
- cash value - not sure but we think about $12k
Life Insurance
- date issued 98
- annual premium $1722 (paid from acct.)
- cash value $18k
- in 2007 - cash value increased $1750 and dividends were $506. looks like we're only making the dividends each year and paying for the cash value increases?
- total death benefit $312k (not sure how this is more than the policy; dividends are included and optional paid up life insurance rider?)

A little more about us. We're 23 and 25 and husband is in dental school. Graduates in May. Then we move to Dallas, TX for a year. He gets paid a little and I am going to find a job. Obviously, it would be nice to have the $ to live on if needed in Dallas - but like I said, we definitely want to do the smartest thing. We also have $ invested.

Thanks everyone - we really appreciate any advice you can give us.