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Inappropriate Whole Life Policy of the Week

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  • I started listening to your podcasts last month. I'm an orthopaedic surgeon and my wife is family medicine. 6 months ago our 10yr term life insurance was converted to a $1 million Mass Mutual Legacy 20 Whole Life Insurance plan with a monthly premium of $1,467.69, so we've paid $8,806.14 so far. After I heard your podcast I asked our financial advisor about this product and he said that he whole heartedly agrees that most whole life is crap, but that the legacy 20 is better in that you only pay in for 20 years and then the rest of your life the investment grows. At the time this satisfied me, but I wanted to check with you all first.

    My wife and I are both 1.5 years into practice so our student debt is not paid off (6.8% rate) nor is our mortgage (4.4%).

    Is the Legacy 20 plan better that what the 15 pages of this thread has described or should I just try to cancel it?

    Comment


    • First step I would suggest you ask your advisor about the decision to “convert” from term life you had. The cause of that choice needs to be eliminated. By default, the FA needs to go. Insurance needs is in the wheelhouse of an FA, not just portfolio management.
      Second, 6 months into the policy? Very doubtful the agent that collected the commission will give it back.
      Beg and plead for your old policy back. OK, stop the bleeding, cancel it.
      Third, shop for term life again. Consider some vendors WCI has listed. Do this concurrently with #2.

      Whoever sold you on converting and your FA have failed you. Expensive lesson.

      By the way, refi the student debt this week then crush it.

      Comment




      • Is the Legacy 20 plan better that what the 15 pages of this thread has described or should I just try to cancel it?
        Click to expand...


        ha. no.

        you were duped.

        lesson learned?

        Comment




        • Is the Legacy 20 plan better that what the 15 pages of this thread has described or should I just try to cancel it?
          Click to expand...


          Sorry to hear that you were preyed upon by an unscrupulous or incompetent financial advisor.

          No, the Legacy 20 plan is not a good fit for where you are in your career. You have student loan debt that needs to be addressed first.

          My recommendation would be to get replacement term life coverage in place first, then surrender the Legacy 20 policy. And, I would not even entertain letting your current advisor even provide quotes on the term life. There are plenty of trusted insurance people Recommended section, here on WCI.

          Comment


          • Good example of an insurance agent masquerading as an advisor. Also a good example of adding one mistake to another:
            So my father bought two policies for me when I was 9 years old (he has a dislike for stock market since he sold at the bottom in both 2000 and 2008):


            1. Whole Life 65 – cash value about 63k now


            2. Variable whole life – cash value about 22k now


            Both at Northwestern Mutual

            I have been talking to a financial advisor (free through residency) who has been giving me a lot of good advice that is in line with what I have written above. He proposed that these policies are not good at accumulation nor protection, and advised that I do a 1035 exchange and move into an Indexed Universal Life Policy (at North American Company) with a 0% floor (1% after 10 years), 12% cap.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

            Comment


            • Residencies/ACGME programs should have some accountability for letting these salesmen have access to residents.

              Comment






              • Residencies/ACGME programs should have some accountability for letting these salesmen have access to residents.
                Click to expand...


                Whoever provided the access probably honestly thinks they are doing the residents a favor.  The problem is really that most docs are pretty ignorant when it comes to this, and referring residents to insurance salesman just perpetuates the ignorance.  So while the residency programs should have some accountability, the leaders of these programs need better educated themselves and that's a huge undertaking.

                Comment









                • Residencies/ACGME programs should have some accountability for letting these salesmen have access to residents.
                  Click to expand…


                  Whoever provided the access probably honestly thinks they are doing the residents a favor.  The problem is really that most docs are pretty ignorant when it comes to this, and referring residents to insurance salesman just perpetuates the ignorance.  So while the residency programs should have some accountability, the leaders of these programs need better educated themselves and that’s a huge undertaking.
                  Click to expand...


                  Agreed.  If they have some accountability though, I bet they wouldn't bring in anyone.  No advice is better than bad.

                  Think about it though.  Who's going to be pushing more to talk to residents?  Someone who charges an hourly rate to give advice or the commissioned salesman?

                  Comment


                  • WCI, Mike Piper and many posts have been written and presentations prepared. What is missing is a repository for finding them. It would be "nice" to have an electronic filing cabinet.

                    Most medical schools have a school of business with finance and accounting departments. Would you rather have a grad student get and outline and present it or a FA or Insurance Agent that is handing out business cards?

                    Of course, what do I know? Most physicians here could do a better job in half the time.

                    Even a list of do's and don'ts would trigger making the mistakes.

                    Comment


                    • This week's edition: 10 years, still with a -25% loss.

                       My white coat is a little shorter than yours (I'm a 34-year-old
                      pharmacist) but that hasn't kept me from making the same WLI mistakes
                      so many of your other readers have. I cry-laugh to myself when I
                      remember how guilty I used to feel when I had to tell my NWM "advisor"
                      that I wasn't able to increase my monthly contributions to my whole
                      life plan(s) yet.

                      I've decided to put in an end to my whole life plans that I started
                      10 years ago; the salesman ended up spinning one plan off into another
                      after drinking the commission Kool-Aid, I'm sure. Between these two
                      plans, I've put in about $50,000 and have a cash value of $37,000. I
                      have all of the documents filled out for a Vanguard 1035 exchange and
                      they're sitting next to me, waiting to be mailed out. However, after
                      re-reading your excellent article and all of the comments, I wondered
                      if you might be able to clarify something.

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

                      Comment


                      • all these people want to exchange these things. has gotta hurt.

                        Comment


                        • A second dose for the week:
                          Hi everybody, unfortunately I am another victim of NWM financial advising and need advice on how to clean up the financial mess that is left over.  I haven’t formally fired the guy, in fear that I may his assistance in some of the disentangling of what I have set up with him.  This includes:

                          1. whole life insurance Paid to 65 of $1mil... currently it is 28K underwater
                          Helping those who wear the white coat get a fair shake on Wall Street since 2011

                          Comment


                          • This week's edition, 8-10% of income going toward whole life and the salesman telling them to quit contributing to the 403b so they an afford it:

                            I am not a physician but I do have a post-doctoral degree in physical
                            therapy. My salary inches over the six figure mark and my spouse makes a
                            little more than half of my salary. About 20
                            months ago we bought whole life insurance. We feel stuck in paying $891 a
                            month and are at this moment talking with our "financial advisor" who
                            sold us the policy into lowering it. I would like to get out of it
                            completely but that would be around an $18,000 loss.
                            We are almost in the red every month bc of this expense and have
                            discussed it numerous times with the "financial advisor" where her
                            advice was to change our deductions so less taxes would be taken out
                            and to stop contributing to my 403b. Which in the end has seemed to
                            screw us royally. In my ignorance and trust in this person has put my
                            family in a financial mess.

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

                            Comment


                            • Stop the bleeding! Clean it! Healing will be gradual.

                              Comment


                              • This week's edition, $24K a year into whole life and no Roth IRAs.
                                My husband and I have really been diving into your book mainly based off our financial advisor getting us both started on a whole life insurance. We were always questioning it since it’s close to $1000 a month combined. Mine is 440 and his is 500. We are young professionals: husband is a dentist and I’m a dental hygienist both 5 years out of school. We want to cancel in but know it will be a battle with our financial advisor. Are there some key points we could bring to him as to why placing that money elsewhere per month would be better for us. I’m doing a Roth 401k that is matched at work and my husband is doing a match 401k at his work. Neither of these are reaching there Full contribution amount per year. Every time we bring it up our financial advisor says we will be pulling from it eventually to live off of in retirement and eventually it will begin to pay the premiums on itself but that feels like a millions years to us at this point!!!
                                Helping those who wear the white coat get a fair shake on Wall Street since 2011

                                Comment

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