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Inappropriate Whole Life Policy of the Week

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  • jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7161
    Joined: 01/09/2016

    I cannot get over the weird relationship physicians seem to have with their financial advisors insurance salespeople, as if the ins guy has some stranglehold over their thought processes. It sounds almost like they are trying to break out of a cult and don’t have the power to keep from getting sucked back in.

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

    #206526 Reply
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 358
    Joined: 02/01/2018

    I cannot get over the weird relationship physicians seem to have with their financial advisors insurance salespeople, as if the ins guy has some stranglehold over their thought processes. It sounds almost like they are trying to break out of a cult and don’t have the power to keep from getting sucked back in.

    Click to expand…

    Yeah, it’s a weird hyper-loyality thing. I think many factors are at play. Some people may know the salesperson beforehand and trust him/her blindly. My boss had whole life policies for both him and his wife which amounted to about $2k per month. He kept saying “oh so and so is a nice guy”, to which I replied “well, you’re nicer because you put his kid through college very quickly”. Another thing is people just don’t take a few minutes to see if they’re getting fleeced or not

    Earn everything.

    #206535 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3399
    Joined: 01/08/2016

    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!!!

    Click to expand…

    so many problems going over their heads….

    #206539 Reply
    Liked by Craigy
    Hank Hank 
    Moderator
    Status: Attorney
    Posts: 1157
    Joined: 03/27/2017

    If your brother in law or that nice guy from church keeps golfing and fishing with you after you drop the whole life policy, then he was your (misguided) friend.  If he drops you after you drop the policy, then you were dealing with a salesweasel.

    #206545 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7161
    Joined: 01/09/2016

    If your brother in law or that nice guy from church keeps golfing and fishing with you after you drop the whole life policy, then he was your friend.  If he drops you after you drop the policy, then you were dealing with a salesweasel.

    Click to expand…

    Great litmus test!

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

    #206547 Reply
    Liked by Vagabond MD
    Craigy Craigy 
    Participant
    Status: Spouse
    Posts: 1811
    Joined: 09/16/2016

    I cannot get over the weird relationship physicians seem to have with their financial advisors insurance salespeople, as if the ins guy has some stranglehold over their thought processes. It sounds almost like they are trying to break out of a cult and don’t have the power to keep from getting sucked back in.

    Click to expand…

    If they follow the northwestern playbook, they quickly try to establish themselves as your best friend to whom you reveal your entire financial picture, intimate personal and family details, life and career goals.  They were likely introduced through a friend or colleague.  You quickly become very vulnerable and connected.  You’ve already decided to open up, possibly over the course of a couple meetings, and their pitch is all about you, helping you protect your family, your income, etc. etc.  If it’s skillful it feels much less like a sales pitch and actually like someone truly helping you out, particularly if you are starting with a near-zero baseline of financial sophistication.

    It’s all classic salesmanship.

    LEVEL 1 WCI FORUM MEMBER.

    #206555 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4212
    Joined: 05/13/2011

    A double dose this weekend, from a doc three years into a policy who started feeling funny when the agent tried to sell him policies on all his other family members too:

    At the end of residency we were hooked up with a financial planning
    firm that only works with physicians. I knew NOTHING about finances
    and figured it was worth whatever I was paying to not worry about it
    (and I had NO IDEA what I was paying). I signed up for a 20-year Whole
    Life CV Insurance plan in 2016 with 12k annual premium. Of course I
    thought this looked awesome when they showed me all the fancy
    projections. Honestly, I would still be working with them now until
    they really pressed their luck and tried to get me to sign up for
    similar policies for my wife and all 3 children last year. It was at
    this time that something didn't feel right and I finally started to
    educate myself. After just a couple hours of reading I realized how
    stupid I must look. We quickly ended our relationship and I
    transferred everything to Fidelity with plans to take total control.
    I'm still learning (with your help) and I am still in the process of
    figuring out what to do with some of these funds as my education
    really expands into the investing world.
    
    My question essentially is what to do with this CVLI policy. I have
    paid 38k to date and if I were to surrender today I would receive 17k
    which after tax would probably be closer to 12-13k. I still have 17
    more years to pay on this. Do I just cut my loses and take a 25k loss?

    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

    #206556 Reply
    Liked by Craigy

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