Announcement

Collapse
No announcement yet.

Inappropriate Whole Life Policy of the Week

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • The usual story:
    I stumbled upon WCI the other night as I was digging for information as to what to do with our WLI policy. My husband and I both signed up for a $500K WLI 7 years ago. And, yes, we are now reckoning with our decision to use a WLI as an additional source of income after we retire. The policy was not purchased at a young age…we were 50 and 55 at the time. And, just to know, there is/will be no one who financially depends on us after we pass to the other side. After a couple meetings with our NML agent, we came to an agreement that includes a paid-up addition (40% of the payment we make). At the time, the bells and whistles centered around an illustration that indicated our premiums would be paid by the 20th year of the policy and an annual “income” would be available when we turn 75.

    Sadly, the reality of our wants/needs did not resonate until recently…first, we plan to retire in 6 years (year 13 of the policy). Also, we now understand “projection” and what is/is not guaranteed…that payments may not end the 20th year and the amount calculated as an annual income is not guaranteed. And, of course, to state the obvious…we really have no need for this much insurance. Though we have not requested a recent illustration, I do have recent numbers. From our 2018 annual statement our total Cost Basis is $165,607 and total Cash Value is $139,235. We assume this reported Cash Value is what we will reclaim upon surrendering the WLI (plus/minus adjustments since January and minus, we assume, surrender fees). As for dropping the WLI…looking ahead to retirement in 6 years… we now realize the first 7 years of retirement will be our most active and promising for adventures. Having to pay premiums to complete the 20-year commitment would limit the plans we will make by reducing our retirement income.
    Helping those who wear the white coat get a fair shake on Wall Street since 2011

    Comment


    • Hard to reconcile it with my Twitter feed full of ads like these:
      Helping those who wear the white coat get a fair shake on Wall Street since 2011

      Comment


      • Today's edition:
        I am another physician that bought a Whole life insurance policy as soon as I graduated from fellowship in 2012. My policy is for $3 million dollars and I am paying about $46k per year for it.

        Cash value after 3 payments? <$81K.
        Helping those who wear the white coat get a fair shake on Wall Street since 2011

        Comment


        • What's your ratio of stories from people unhappy with their policy to people who are happy?  I assume you get at least a handful of stories from happy people.

          Comment


          • I haven't been keeping this updated like I should have, but I assure you it just keeps happening over and over again. That's right. A single person with no children sold not only whole life, but also term life by their "friend."
            Right out of school I decided to get a financial advisor, an old
            friend from college, and soon learned I was suckered into buying a
            bunch of insurance i dont need. I now have a NWM 65 life with $14,400
            annualized premium and $36,082 cash value. I also have NWM guarubteed
            renewable DI and Term 80.
            I’m single, no children and need advice as to the next step? Im
            started to learn a lot through your website and reading about doing
            some of this myself. I’d eventually like to fire my advisor but at
            this point am not rushing that.

            I know you have addressed this topic a lot and i have read through
            most of it to the point my eyes are crossing.

            Helping those who wear the white coat get a fair shake on Wall Street since 2011

            Comment


            • It's a shame the cycle continues.....thanks for sharing anyway.

              Comment


              • This one off Facebook. 10 years and still a -15% cumulative return (still negative even including the value of the insurance):
                I know whole life is a stupid idea. However, i already bought in starting 2008.

                So i have put in 101k into it. Death benefit worth 900k.


                Surrender value is 85k.

                Helping those who wear the white coat get a fair shake on Wall Street since 2011

                Comment


                • This one off Facebook. 10 years and still a -15% cumulative return (still negative even including the value of the insurance):
                  I know whole life is a stupid idea. However, i already bought in starting 2008.

                  So i have put in 101k into it. Death benefit worth 900k.


                  Surrender value is 85k.

                  Helping those who wear the white coat get a fair shake on Wall Street since 2011

                  Comment


                  • I had dinner with a couple med school classmates and their spouses last week. One of them just had a meeting with a FA and was being pitched whole life. They were thinking about it. I said, "Nooooooooooooooooooo!" I texted him and his wife the following links when I got home that evening.

                    https://www.whitecoatinvestor.com/12-questions-to-ask-before-purchasing-whole-life-insurance/

                    https://www.whitecoatinvestor.com/what-you-need-to-know-about-whole-life-insurance/

                    https://www.whitecoatinvestor.com/how-to-evaluate-your-own-whole-life-policy/

                    https://www.whitecoatinvestor.com/forums/topic/inappropriate-whole-life-policy-of-the-week/page/1/

                     

                    They read these and then correctly decided against whole life.

                    Comment


                    • Ugh. Selling whole life to med students. One of my first financial mistakes!
                      Helping those who wear the white coat get a fair shake on Wall Street since 2011

                      Comment




                      • What’s your ratio of stories from people unhappy with their policy to people who are happy? I assume you get at least a handful of stories from happy people.
                        Click to expand...


                        The ration is normally 2:1 for any whole life insurance policy. These are actually defined in the agreement. Read the policy! Agent, beneficiary, and insured.

                        1) The agent benefits immediately and each subsequent year with residual earnings. Commission on new policies and residuals make the agent very very happy.

                        2) The beneficiary benefits at the very end of the transaction. A tax advantaged significant distribution is a welcome benefit and make the individual very very happy.

                        3) The insured, sometimes know as the victim, is very dissatisfied and unfortunately deceased if the contract is completed. Short of money and deceased, the insured is not in a position to indicate anything at all.

                        Thus, 2:1 parties to the WLI policy are extremely pleased with the policy.

                        The unknown is the Insurance company and the beneficiary. That's where the Insurance company makes their money with actuaries, underwriting, and attorneys. Terms and conditions are modified such that the odd's are completely stacked in their favor. Little things like suicide clauses and non-disclosure, and termination fees are used to greatly enhance the odds of success. The insurance company may lose only when a contract is completed early. Things happen, no big deal. One contract pays off with a loss, but the odds are such that the Insurance company wins consistently.

                        No insurance agent of beneficiary ever disputes receiving a check.

                        The solution is simple. Require the definition of Insured to include the words "Victim and Loser". No way to win financially or on a terminated or completed contract.

                        Now you know why "happy customers" don't write favorable reviews.

                         

                         

                         

                        Comment






                        • What’s your ratio of stories from people unhappy with their policy to people who are happy?  I assume you get at least a handful of stories from happy people.
                          Click to expand...


                          I don't know, at least 10:1. Higher if I don't include those who sell whole life insurance. It's not 0% though for sure. Some people really do understand this stuff and they still like it. Most are doing the Bank on Yourself/Infinite Banking thing and just think it's really cool how it works and have a major distrust of banks.
                          Helping those who wear the white coat get a fair shake on Wall Street since 2011

                          Comment




                          • Most are doing the Bank on Yourself/Infinite Banking thing and just think it’s really cool how it works and have a major distrust of banks.
                            Click to expand...


                            If you distrust (big) banks, why on earth would you trust life insurance companies?

                            Comment







                            • Most are doing the Bank on Yourself/Infinite Banking thing and just think it’s really cool how it works and have a major distrust of banks. 
                              Click to expand…


                              If you distrust (big) banks, why on earth would you trust life insurance companies?
                              Click to expand...


                              Don't apply logic. It's Crixian.
                              Helping those who wear the white coat get a fair shake on Wall Street since 2011

                              Comment







                              • Most are doing the Bank on Yourself/Infinite Banking thing and just think it’s really cool how it works and have a major distrust of banks. 
                                Click to expand…


                                If you distrust (big) banks, why on earth would you trust life insurance companies?
                                Click to expand...


                                Most people aren't too bright, or too logical.

                                What I don't get is why anyone would see a WL policy to a student of any stripe.  How are they going to pay the premiums when they don't have any real income yet?!

                                Comment

                                Working...
                                X