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well there are at least 2 different kinds of whole life policies which are broken down further with a range of prices that vary greatly. whole life is a catchall for them all.. which one are you going to compare?
there is participating whole life, non-participating whole life. they are then divided into , level premium whole life ,limited payment whole life and single premium.
well there are at least 2 different kinds of whole life policies which are broken down further with a range of prices that vary greatly. whole life is a catchall for them all.. which one are you going to compare?
there is participating whole life, non-participating whole life. they are then divided into , level premium whole life ,limited payment whole life and single premium.
we can eliminate some of those just because we know it it's not a Limited Pay...based on the premium amount and the death benefit. We know it's not single premium...since they've paid more than once.
Participating or Non Participating rates are not much different for this time frame (my opinion, related to the LOW INTEREST RATE ENVIRONMENT)
So I think I will only look at Level Premium Whole Life. We still need MORE INFORMATION THOUGH FROM THE OP.
Last edited by midwestlaxer; 08-06-2013 at 05:40 PM..
Why guess ,let him fill in the blanks we are missing and we will be glad to compare.
At least give us the basics ,what kind of policy ,minimum guarantees and current rates.
It won't be an exact comparison but at least we have something to go by.
Why guess ,let him fill in the blanks we are missing and we will be glad to compare.
At least give us the basics ,what kind of policy ,minimum guarantees and current rates.
It won't be an exact comparison but at least we have something to go by.
technical analysis this will be not. Simple yes or no. My gut tells me it's in the ballpark.
Ten years ago the wife and I purchased a $300K term 30 year with level premiums the first ten years. That ten years is up and because of other financial factors, mainly pension related, I needed to secure life insurance on me for the long haul. Plus I was about to turn 50. This policy would expire at 70 and if I bought a new one now it would last until I was 80. Neither of those are good times to shop for life insurance. I prefer term as I don't need or want life insurance as an investment vehicle but there were no other options so I went with the permanent policy. It is called "Flexible Premium Indexed Life Policy". Preferred non smoker.
I originally wanted $1M but learned through the underwriting that my class had dropped from the top one to the middle one due to some health issues I had the past ten years. I could not afford the $1M and I exercised the conversion option on the original policy and converted it to permanent. I needed a "set it and forget it" policy for a defined death benefit. I agree there are so many twists and turns with this but it was the best option for my circumstances.
After two years the value is $4250
Premiums are $2,000 annual.
Surrender $9199
Cost of insurance $329 (about $27/month)
Expense charges $740 ($35/month)
Fixed interest earned $109
Riders: Annual reset credit and overloan protection. Both no charge.
Eventually the policy will pay for itself but that is years away.
I chose the fixed option (currently at 3.85%/floor of 2%) because I didn't want to worry about losing money with this or have to actively watch it--set it and forget it. This is for the death benefit and not an investment vehicle. I have no intention on cashing this in or taking a loan ever on this. This is to pay the wife if I die before her and nothing else.
Back to the original question-are these fees reasonable?
Yes....the policy you have is reasonable for the premium you pay considering your age and health. That floor is good considering most other stable investments are paying less in interest. I'd look at your illustration to see when changes might need to be made in the future. I think you might want to consider funding this now while your income is higher at a higher rate. I think you might be paying the minimum right now, I'd look to bump that up.
Most will tell you to dump this policy. I have no position.
Ten years ago the wife and I purchased a $300K term 30 year with level premiums the first ten years. That ten years is up and because of other financial factors, mainly pension related, I needed to secure life insurance on me for the long haul. Plus I was about to turn 50. This policy would expire at 70 and if I bought a new one now it would last until I was 80. Neither of those are good times to shop for life insurance. I prefer term as I don't need or want life insurance as an investment vehicle but there were no other options so I went with the permanent policy. It is called "Flexible Premium Indexed Life Policy". Preferred non smoker.
I originally wanted $1M but learned through the underwriting that my class had dropped from the top one to the middle one due to some health issues I had the past ten years. I could not afford the $1M and I exercised the conversion option on the original policy and converted it to permanent. I needed a "set it and forget it" policy for a defined death benefit. I agree there are so many twists and turns with this but it was the best option for my circumstances.
After two years the value is $4250
Premiums are $2,000 annual.
Surrender $9199
Cost of insurance $329 (about $27/month)
Expense charges $740 ($35/month)
Fixed interest earned $109
Riders: Annual reset credit and overloan protection. Both no charge.
Eventually the policy will pay for itself but that is years away.
I chose the fixed option (currently at 3.85%/floor of 2%) because I didn't want to worry about losing money with this or have to actively watch it--set it and forget it. This is for the death benefit and not an investment vehicle. I have no intention on cashing this in or taking a loan ever on this. This is to pay the wife if I die before her and nothing else.
Back to the original question-are these fees reasonable?
What you really bought was a universal life policy, not really a whole life policy. There is a difference. I am guessing you bought the policy so you could take the 100% option on your pension. Look at it this way, without that life policy, how much would you be losing in annual income from that pension, probably a lot more than the $2000+fees. I would strongly urge you to consider looking into a whole life policy from Northwestern Mutual, Mass Mutual or NY Life if you are taking out a policy that size. It's going to cost you more in premiums but the structure of the policy is much better for what you need and the dividend is WAY better than you are getting--6% at Northwestern Mutual, similar at the other two....
going back to my points in the beginning the big question is how much of what you paid in are you getting that interest on? that varys from company to company as you only get it on the part they decide is going to be your refund amount.
one companys 3% may be the same as another companys 4% depending on how they compute that refund amount. it isn't a simple comparison of rates that goes on here . the base amount it is calculated off of will be different from policy to policy.
what they charged you for fees,commissions and expenses up to the point you cash in will all vary company to company so that amount you get interest on will vary.
it varys so much i did an exchange from first investors to met life and for the same premium picked up another 50k in additional coverage and a bigger refund if i cash it in even though my interest rate at first investors was higher..
Last edited by mathjak107; 08-07-2013 at 04:01 AM..
Yes....the policy you have is reasonable for the premium you pay considering your age and health. That floor is good considering most other stable investments are paying less in interest. I'd look at your illustration to see when changes might need to be made in the future. I think you might want to consider funding this now while your income is higher at a higher rate. I think you might be paying the minimum right now, I'd look to bump that up.
Most will tell you to dump this policy. I have no position.
What you really bought was a universal life policy, not really a whole life policy. There is a difference. I am guessing you bought the policy so you could take the 100% option on your pension. Look at it this way, without that life policy, how much would you be losing in annual income from that pension, probably a lot more than the $2000+fees. I would strongly urge you to consider looking into a whole life policy from Northwestern Mutual, Mass Mutual or NY Life if you are taking out a policy that size. It's going to cost you more in premiums but the structure of the policy is much better for what you need and the dividend is WAY better than you are getting--6% at Northwestern Mutual, similar at the other two....
Yup-I took the 100% option for the reason you stated.
Thanks to you and others for your comments.
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