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Inappropriate Whole Life Policy of the Week

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  • The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    On another note, do people seriously think it’s reasonable to email you and ask if they can send you all their plan documents to go over so you can tell them what to do?

    Click to expand…

    Clearly that’s unreasonable.

    To be fair, though, the guy didn’t technically ask for that.  He seems so deliberate in not actually asking for it, that it seems that he knows it would be an unreasonable request.  He does dance around it nicely.

    I think if WCI said, “I’d recommend you should seek advice from X”, with X being someone WCI knows to be competent in these issues, then it would be a completely appropriate response and well-received by the person who sent the message.

    Click to expand…

    Are you reading my email? That’s exactly what I did. Then I linked to this post:

    How To Evaluate Your Own Whole Life Policy

    and gave a two line summary of it.

    But yes, I get plenty of unreasonable requests. That’s okay. It’s part of this gig that I enjoy most, almost like a personal ministry of helping out one individual/family at a time.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #176300 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    Today’s edition:

    I legitimately have buyer’s remorse on my 5 million whole life insurance policy I purchased with my wife in the early 2000’s when we were in our mid-30s . We have paid about $70,000 a year since then. We are in our mid 50’s and will continue to pay this until we are in our early 60’s when the dividends pay for the premiums. We were trusting and naive and had young kids and were crazy busy when we purchased them. We have met with various more educated financial people and know we are too far along to make any changes now. We are fine financially and have a network of about 7 million but I am still haunted about this huge financial mistake we made. …I am grateful that we are as lucky as we are financially but my stomach still turns when I think of how naive we were and how much we lost financially in the long run.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #177927 Reply
    Liked by Tim
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7602
    Joined: 01/09/2016

    AUDIBLE gasp.

    Mistakes vary. Better to find out earlier. Fortunately, sounds like they are ok in spite of it and need to lay off the self-flagellation. No good will come of it.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #177930 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2417
    Joined: 09/18/2018
    Splash Refinancing Bonus

    Payday loans and Car Title Loans are legal too.
    I wish an impartial bi-partisan agency at least had the authority to require adequate labeling. Like
    “CAUTION, HAZARDOUS TO ……”

    #178016 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    Today’s Edition: Three cash value policies sold before student loans were even paid off. Some “financial advisor.”

    I am so grateful for finding this blog and podcast. I found this site last spring without even knowing I needed it. I thought I was totally set with my FA from NY life insurance. Well I since then I refinanced my loans; cashed out my 2 whole life and 1 vul product (with a significant surrender charge) and used the proceeds to pay off my remaining 125k in student loans and front load both kids 529s with the remainder.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #179264 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    Todays’ Edition: His and Hers $20K+ losses after 9 years. You can’t make this stuff up.

    Me and Wife have two WLIs purchased in 2010. Each policy is 1M Death Benefit. We both pay approximately 10.5K premium per year.
    I reviewed in-force illustration for both. At this point, considering surrender cash value of 72K each, I am -20K under and wife is -23K in the policy.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #179421 Reply
    Avatar artemis 
    Participant
    Status: Physician
    Posts: 500
    Joined: 12/02/2016

    This thread is so depressing!  Even though you’re getting the word out, a lot of our colleagues are still being fleeced, and there’s no end in the foreseeable future.

    #179485 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    I calculate the return on this one as 3.22% per year over 23 years. Considering a 30 year treasury was yielding 7% 23 years ago, that’s pretty sad. I would not expect even that good of a return on one bought today.

    Age 33, several whole life policies.
    Main policy is 23 years old with a cash value of $60,000, annual premium of $1800 (fixed), dividend around $1200 currently. Benefit of about $330,000. Projected growth at 4.5%, guaranteed growth at 2.5%. I am considering keeping this policy and changing the dividends to go towards the premium (currently buys paid up additions). I would use this as part of my bond allocation in the Asset Allocation. Does this make sense? I have a new found hatred for whole life and all the money wasted already on this policy, but going forward it seems like a reasonable investment for some of my “bond” allocation.

    3 other policies that are $100,000 benefit add ons from this main policy. They are at a loss still with a cash value around $10,000 and basis of $14500. Premiums 1000-1300/yr. Newest of these from 2017.

     

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #186072 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3840
    Joined: 01/08/2016

    But think of the perks!
    ???

    #186114 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011
    Earnest refinancing bonus

    From an insurance agent:

    Last week a 33 year old female attending contacted me (single with no dependents) paying 36K a year in whole life premium to NWM

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #186667 Reply
    Liked by Zaphod
    FunkDoc83 FunkDoc83 
    Participant
    Status: Physician
    Posts: 190
    Joined: 04/12/2018

    I wonder what the insurance salesperson makes per year selling all this stuff to us?  If you get between 50-100% of the first years premium as a reward, that could add up pretty quick if you get enough people to sign up.

    #186700 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    This one is a real beauty:

    I’m a third-year medical student, single, no dependents. My veteran parents purchased a Navy Mutual Flagship Whole Life Insurance policy for me 2.5 years ago. Because I am their dependent, they’re currently paying for the policy, about $2.5k/year with a dividend option to “Purchase Paid-Up Additions” and an included “Chronic Illness Option.” Death benefit is $500k and scheduled paid up date will be in 2036. …..Since purchasing this policy, we haven’t taken out loans against it or actually done anything with it.

    I asked why it was purchased.

    My parents bought the policy thinking that it would pay a death benefit to me upon my father’s death, though now that I actually read through and understand the policy better, I’m the “Insured” person and my father is the “Owner,” so in fact the benefit would pay upon MY death. I’m not even out of medical school nor do I have any dependents, so this policy seems unnecessary.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #186779 Reply
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 409
    Joined: 06/12/2017

    This one is a real beauty:

    I’m a third-year medical student, single, no dependents. My veteran parents purchased a Navy Mutual Flagship Whole Life Insurance policy for me 2.5 years ago. Because I am their dependent, they’re currently paying for the policy, about $2.5k/year with a dividend option to “Purchase Paid-Up Additions” and an included “Chronic Illness Option.” Death benefit is $500k and scheduled paid up date will be in 2036. …..Since purchasing this policy, we haven’t taken out loans against it or actually done anything with it.

    I asked why it was purchased.

    My parents bought the policy thinking that it would pay a death benefit to me upon my father’s death, though now that I actually read through and understand the policy better, I’m the “Insured” person and my father is the “Owner,” so in fact the benefit would pay upon MY death. I’m not even out of medical school nor do I have any dependents, so this policy seems unnecessary.

    Click to expand…

    This kind of stuff is why I have such a low opinion of most people in my industry. A universal fiduciary standard would be a good start to putting an end to these abusive sales practices.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    http://www.fswealthadvisors.com | (717) 496-0900

    #186802 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4313
    Joined: 05/13/2011

    This one is an IUL, not WL, but similar story. The expected returns didn’t materialize despite a 10 year bull market.

    You gave advice not to buy a IUL, but what if we already have? Is it worth it to take the cash value, close the policy, and run? After 15 years of not seeing returns I was hoping for, I’m debating what to do.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #187648 Reply
    FunkDoc83 FunkDoc83 
    Participant
    Status: Physician
    Posts: 190
    Joined: 04/12/2018

    How appropriate to hear more horror stories about WL and other insurance products on groundhog’s day.  Just like the bill murray movie, will this cycle ever end…….

    #187660 Reply

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