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Inappropriate Whole Life Policy of the Week

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  • This stuff is crazy.

    This is actually what the fiduciary rule was supposed to target, issues such as these, which is why there was such heavy lobbying against it. Trumps admin is trying to scale it back, hopefully they cannot.

    Its such a lucrative business, on Fintwit there was an ad going selling a practice (due to new rule) around that showed 1 million in income from just 10 million in assets under management. Thats a great gig for the sellers.
    Click to expand…


    I was at a meeting last year with a bunch of “financial advisors.” One of the hosts asked these two guys who were partners if they were worried about the Fiduciary rule. They just laughed and said it didn’t apply to them as they only had their insurance licenses. Their focus was to sell residents some high commission insurance products. If memory serves me, their goal with every dinner they hosted at their local Ruth’s Chris was to write $50,000 in commissions from those attending.
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    My advice to residents (and attendings alike) is to skip these "free" steak dinners. There is no free lunch, the food is generally unhealthy and too plentiful, and the sales pitch can be too overwhelming for many to resist. Why put yourself in harm's way for a piece of meat?

    Comment


    • The sad thing is that, while many of these life insurance agents know they are doing wrong and go ahead anyway, many of these cases are written by agents who honestly think they are doing the right thing for their client. Why? Because they are so poorly trained. Most of their their training is not on understanding the products they sell; but, rather, on just how to sell the product.

      In my opinion, many of the life insurance companies are willfully complicit in the failure to properly train their agents. Probably because many agents, if they actually understood the policies they sell, would not be able to look themselves in the mirror.

      I began my career as a "financial advisor" at a life insurance company. I quickly grew tired of the, "The answer is life insurance, what was the question, again?" mentality that pervaded my office. Luckily, I had an economics and finance degree and questioned much of my training and refused to buy into their philosophy.

      Regardless the reason, there are way too many insurance agents and financial advisors who are not fiduciaries and - whether because they are dishonest, incompetent, or simply poorly trained and misinformed - doctors should be wary of agents proposing any type of permanent life insurance.

      Comment


      • Biggest reason there will be no change is the amount of financial pull the insurance companies have over state & federal legislatures.  Insurance lobbying is a multibillion dollar industry.  There's no moving the behemoths.

        Comment


        • I've been slacking off on adding all of the inquiries I get like this on to this thread, but this one was a doozie:
          I am trying to get in touch with you for some much needed advice.  I feel ridiculous and it’s an expensive ridiculous.  I am told I really got taken…

          But now I need to know what to do, because yet another premium is looking in about 10 days before the grace period starts.  The important questions are:

          Should I lower the death benefit, keep the policy and just pay a lower premium?

          Should I dump the policy and walk away from the $350k (you read that correctly, gulp) that I have put into it?  (My husband hates this idea and thinks there’s got to be a way to salvage something from all of this sunk cost).

          This is a Met Life Policy.  I am happy to share any details and illustrations but basically, I was told that if I pay 146,250 for 5 years for a $5mm face death benefit, then the policy, after that would be ‘self sustaining’.

          Fast forward to year 3 when I could not, because of a number of different circumstances, see myself paying in the total premium.  The agent came up with a ‘pay 50k for 2 years, then 6k for the third year’ and then it will sustain itself, but you won’t have as much cash value.

          I don’t have an advisor to turn to and although I have talked to other agents (who I should be able to trust because one of them is my nephew and another comes from a close friend), they are saying this policy is a time bomb.  Met won’t support the dividend, given they are no longer selling these kinds of policies, and there’s no way this policy will self sustain.

          The loan will get so big and the interest on it, commensurate (and particularly if interest rates start to rise as we expect they might) that it could very well overwhelm the death benefit and certainly the cash value (if there is any).  Dumping it will mean that I have ‘earned’ the loan amount and will have to pay ordinary income taxes on it.

          This seems like a disaster scenario to me.  I would very much like to send you any necessary illustrations to continue the discussion, but really the question is, what the heck should I do ?   I am told I cannot alter the policy during the grace period and I am panicked thinking about paying another 50k into this thing that might be money flushed down the toilet.

          Help!  What do you need to know in order to give me some ideas about modifying the policy?  Or do you really think this is a completely lost cause.  This has been financially devastating frankly but I need to get to the bottom of it.

          Yup, that's right. A premium of $150K a year....
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

          Comment






          • I’ve been slacking off on adding all of the inquiries I get like this on to this thread, but this one was a doozie:
            I am trying to get in touch with you for some much needed advice.  I feel ridiculous and it’s an expensive ridiculous.  I am told I really got taken…

            But now I need to know what to do, because yet another premium is looking in about 10 days before the grace period starts.  The important questions are:

            Should I lower the death benefit, keep the policy and just pay a lower premium?

            Should I dump the policy and walk away from the $350k (you read that correctly, gulp) that I have put into it?  (My husband hates this idea and thinks there’s got to be a way to salvage something from all of this sunk cost).

            This is a Met Life Policy.  I am happy to share any details and illustrations but basically, I was told that if I pay 146,250 for 5 years for a $5mm face death benefit, then the policy, after that would be ‘self sustaining’.

            Fast forward to year 3 when I could not, because of a number of different circumstances, see myself paying in the total premium.  The agent came up with a ‘pay 50k for 2 years, then 6k for the third year’ and then it will sustain itself, but you won’t have as much cash value.

            I don’t have an advisor to turn to and although I have talked to other agents (who I should be able to trust because one of them is my nephew and another comes from a close friend), they are saying this policy is a time bomb.  Met won’t support the dividend, given they are no longer selling these kinds of policies, and there’s no way this policy will self sustain.

            The loan will get so big and the interest on it, commensurate (and particularly if interest rates start to rise as we expect they might) that it could very well overwhelm the death benefit and certainly the cash value (if there is any).  Dumping it will mean that I have ‘earned’ the loan amount and will have to pay ordinary income taxes on it.

            This seems like a disaster scenario to me.  I would very much like to send you any necessary illustrations to continue the discussion, but really the question is, what the heck should I do ?   I am told I cannot alter the policy during the grace period and I am panicked thinking about paying another 50k into this thing that might be money flushed down the toilet.

            Help!  What do you need to know in order to give me some ideas about modifying the policy?  Or do you really think this is a completely lost cause.  This has been financially devastating frankly but I need to get to the bottom of it.

            Yup, that’s right. A premium of $150K a year….
            Click to expand...


            OMG. This is insane. I really cant believe you're allowed to rip people off so blatantly.

            Comment






            • I’ve been slacking off on adding all of the inquiries I get like this on to this thread, but this one was a doozie:
              Click to expand...


              You need a quick/automated method to send these WL/UL policies to this thread that doesn't take much effort on your part. I had actually thought you were winning the war and had seen a decrease in inquiries.

              With this situation I have so many questions like how can doctors be so smart yet so bad with money? (Just thinking out loud......this is not meant to be an insult to anyone). I know plenty of Engineers who are brilliant yet are horrible with money as well.

              It is highly unlikely they have any 'earned' income on this policy. Get $5M in Term policy for probably $3000/year (just a WAG) and you SAVE $45k this year! The decision is so easy for those of us who didn't pay $350k.

              Modern day barbarians wear nice suits. Beware and learn to spot them.

               

              Comment






              • The problem lies in that doctors assume insurance agents are experts in their field and will try to do what’s best for you bc that’s what doctors do. If another doctor asks my opinion about something in my field then they typically assume I am providing good advice unless we’re to say something so crazy nobody would believe it. Agents promote this idea that they are in essence insuranceologists. They are not.
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                Commissionologists.

                Comment


                • When they say, "Get Met Life.  It Pays" they're obviously talking about their agents,   

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                  • Today's edition:
                    I JUST recently purchased a whole life policy from a friend that works at Northwestern Mutual. I’m worried though that I made a mistake, but the whole reason it happened was because I am a recent undergraduate college graduate with no debt, loans, etc. and a decent salary- He’s now encouraged me not to cancel, so I keep having second thoughts. Is buying term the way to go for someone like me instead? It’ll look to be around $200 a month, but I’m nervous on what the fees will be to cancel.

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

                    Comment


                    • Commissionologists, haha! Sadly, they are good at what they do.

                      Comment


                      • So glad for this website educating me on how to get out of WLI and rid myself of my NWM "financial advisor." Luckily I was only one year invested in the WLI policy.

                        Comment


                        • Today's edition:
                          I purchased a whole life insurance 65 policy about a year ago ($200 a month) and am now realizing it was HUGE mistake!! I was really uneducated about investing money and the advisor told me this would be a great investment and good return on my money. I’m 23, not married, no kids, no property and don’t make that much money. I had no need for life insurance whatsoever (he told me the life insurance was an “added bonus” and it was an investment tool) Totally my mistake, but I trusted the advisor and thought I was making the right decision at the time.

                          Needless to say, I’m cancelling the policy ASAP. Definitely a learning lesson on my part….
                          Helping those who wear the white coat get a fair shake on Wall Street since 2011

                          Comment


                          • ^^^At least that person is rectifying the mistake early.  Losing around $2400 hurts, but compared to the losses some of your other posts have reported, it's peanuts.

                            Comment






                            • ^^^At least that person is rectifying the mistake early.  Losing around $2400 hurts, but compared to the losses some of your other posts have reported, it’s peanuts.
                              Click to expand...


                              She says the surrender value is $18
                              Helping those who wear the white coat get a fair shake on Wall Street since 2011

                              Comment









                              • ^^^At least that person is rectifying the mistake early.  Losing around $2400 hurts, but compared to the losses some of your other posts have reported, it’s peanuts.
                                Click to expand…


                                She says the surrender value is $18
                                Click to expand...


                                did she say how she came to realize it was a bad decision?

                                 

                                Comment

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