Reputable? Whole Life with Northwestern Mutual...

[mx_599]

There's another trick that can be used especially for people who anticipate a much higher income soon. This strategy involves something called blended whole life insurance. This might be a good test. Tell your agent you are considering waiting and just putting in a lot more money in a few years when your income is hire. He'll likely talk about time not being on your side and how doing this sooner will benefit you. But I'd be curious to know if he can come up with this strategy. It can significantly increase your MEC level.

I can't imagine you have any idea what I am talking about with regards to this blending thing. That's ok, I'll explain more later when I have a little more time.

is blending the whole life the same as adding term life to policy? i thought earlier on you said NWM could not do a term rider...but i think they can.

i believe i told him i was not interested.

would you rather have a term rider on WL or simply get another WL policy in 2-3 years?
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shoot, never mind, i think you already explained it

 

[LGilmore]

"Would you rather have a term rider on WL or simply get another WL policy in 2-3 years?"

If I recall from your eariler post this is more a budgetary purchase than an absolute need. You wouldn't necessarily need to have a term rider added to the policy if you don't have a specific face amount "need" to cover and are not budgeted to do it all in WL.

That said, how's your health? If you are worried or concerned about future insurability it might not hurt to look at a term rider or a guaranteed option rider. The advantage to doing either of these methods is you don't have to prove insurabiliy again. If that's not a concern, then just do what you originally planned.

 

[BNTRS]

is blending the whole life the same as adding term life to policy? i thought earlier on you said NWM could not do a term rider...but i think they can.

i believe i told him i was not interested.

would you rather have a term rider on WL or simply get another WL policy in 2-3 years?
- - - - - - - - - - - - - - - - - -
shoot, never mind, i think you already explained it

There are two possibilities when it comes to adding term insurance to a whole life policy. In no particular order...

1.) Term rider (usually YRT)

This option adds a term insurance rider that is yearly renewable usually (meaning premium is renewed and changes--goes up--every year) and lasts for something like ten years.

Some companies will let you convert this term insurance into WL later, some (Northwestern) won't.

Why would you want to do this? Usually for three reasons

1.) Increase the death benefit so as not to MEC the policy with the amount of money you are planning to put in it.

2.) Conversion guarantee, where you don't have the money to get the entire amount of WL insurance that you want, but you want to guarantee that you will be able to get it in a few years without worry of an adverse underwritting situation (this is the some will some won't situation).

3.) Seeing a immediate need for a much larger death benefit for the next couple of years, and then wanting some permanent insurance, but not as much as before.

2.) Blended

Blending attaches a one year term policy to your WL contract. The dividends pay for the term insurance (and sometimes you pay a premium that pays for them). The term insurance face amount decreases annually as the WL death benefit increases. Eventually, the entire contract will be entirely WL. The insurered could also drop the extra death benefit from the term after having it for a period of time.

Two likely strategies behind this.

1.) Want permentant insurance but don't have the money to have 100%. Blended premiums can be quite a bit lower.

2.) Increases death benefit so as not to MEC the contract.

3.) Needing a lot now and maybe not later


YES, there is some overlap here. The situation dictates which one is a better option.

 

[NMFNMDRT]

There are two possibilities when it comes to adding term insurance to a whole life policy. In no particular order...

1.) Term rider (usually YRT)

This option adds a term insurance rider that is yearly renewable usually (meaning premium is renewed and changes--goes up--every year) and lasts for something like ten years.

Some companies will let you convert this term insurance into WL later, some (Northwestern) won't.

Just to be clear...I've never sold a Northwestern term policy that didn't have a conversion option with it. Depending on the contract the option is either 10 years or to age 60.

 

[mx_599]

what do you guys think of this response from my agent:

I’m going to try to answer your e-mail although it appears you are making statements on some things rather than asking a question, I’m not totally sure but here goes. Some answers I have would best be served by me faxing you some studies done by NML rather than trying to explain them. So I would need a fax number as well.

The rate for unborrowed funds for NML starting 1/1/10 is 6.15%, on borrowed funds it is 5.6%. Some companies like to talk about direct recognition vs non direct recognition but what you really need to look at is the expense & mortality ratio’s and interest numbers from all companies you are looking at. Some companies such as Mass Mutual that may be non direct have the same dividend scale as we do when you add in waiver of premium. This is where a look at competitive reports would be helpful. This is something I can fax to you. Also, re: the IRR, NML did a study on a $250K policy issued in 1989 & showing the results in 2009 (20 years) what the original IRR premiums to total cash value to what the actual was. NML original was 6.6% actual was 5.26% (1.34 diff). NYL original was 7.61% actual was 4.34% (3.27 diff), Mass Mutual original 6.66% actual 3.87% (2.79 diff), Guardian 7.44% actual 3.79% (3.65 diff). There are several other companies in the study with the results of all those companies being lower than NML. Ohio National was not in the study.

NML offers a waiver of premium rider on their term & permanent policies. I have seen where some companies when an insured becomes disabled & they have a term policy, the company will only waive the term premiums. If you were to convert to permanent they won’t waive the perm premium only the term premium. NML also offers an APB (additional purchase benefit) rider. The insured can purchase add’t policies regardless of changes in the insured’s health, activities, or occupation that have occurred since the APB was attached to the policy subject to the company’s financial underwriting standards. NML also offers a conversion feature where you have the option to convert all or a part of your coverage to permanent insurance w/out a med exam regardless of any changes in your health.

Our annual policy fee is $60. I’m not sure what the $3 per $1,000 in death benefit fee is in your statement. Regarding the dividends being dependent upon how much death benefit, I’m not sure if this answers your question (I’m not sure of the question) but a $50K policy for example will not generate as much dividends as say a $500K policy. As far as Guardian charging less than NML for paying monthly I have no idea. Paying monthly is not something I do on any of my policies because you are paying extra regardless of the company.

The rest of your questions will more than likely be answered by the information I need to fax to you. So if you could provide me with that number I will send you the rest of the information.

 

[LGilmore]

I think it is as I said real early, with any of these companies you'll be fine. They're all good. As far as actual results for 250k, yup could be, but then again at 500k things might be completely different. Or at 100k or 1 million. These companies jocky back and forth depending on face amount. Overall, all of them do fine.

"I’m not sure what the $3 per $1,000 in death benefit fee is in your statement"

Are you talking about the dump in provision that has 4 or 5 different names depending on the company? the 3% is the sales charge which is fair dinkum. Considering the commission on the policy is significantly more on the regular policy.. 3% or even 9% one time isn't terrible.

 

[Cali_jake]

Get custom whole life with NYL. Its cash value driven I put in 2k a month 24k a year and had it for 4 years cash value is accumilating very fast. One of the best policies you can get.

 

[dgoldenz]

what do you guys think of this response from my agent:

I’m going to try to answer your e-mail although it appears you are making statements on some things rather than asking a question, I’m not totally sure but here goes. Some answers I have would best be served by me faxing you some studies done by NML rather than trying to explain them. So I would need a fax number as well.

The rate for unborrowed funds for NML starting 1/1/10 is 6.15%, on borrowed funds it is 5.6%. Some companies like to talk about direct recognition vs non direct recognition but what you really need to look at is the expense & mortality ratio’s and interest numbers from all companies you are looking at. Some companies such as Mass Mutual that may be non direct have the same dividend scale as we do when you add in waiver of premium. This is where a look at competitive reports would be helpful. This is something I can fax to you. Also, re: the IRR, NML did a study on a $250K policy issued in 1989 & showing the results in 2009 (20 years) what the original IRR premiums to total cash value to what the actual was. NML original was 6.6% actual was 5.26% (1.34 diff). NYL original was 7.61% actual was 4.34% (3.27 diff), Mass Mutual original 6.66% actual 3.87% (2.79 diff), Guardian 7.44% actual 3.79% (3.65 diff). There are several other companies in the study with the results of all those companies being lower than NML. Ohio National was not in the study.

NML offers a waiver of premium rider on their term & permanent policies. I have seen where some companies when an insured becomes disabled & they have a term policy, the company will only waive the term premiums. If you were to convert to permanent they won’t waive the perm premium only the term premium. NML also offers an APB (additional purchase benefit) rider. The insured can purchase add’t policies regardless of changes in the insured’s health, activities, or occupation that have occurred since the APB was attached to the policy subject to the company’s financial underwriting standards. NML also offers a conversion feature where you have the option to convert all or a part of your coverage to permanent insurance w/out a med exam regardless of any changes in your health.

Our annual policy fee is $60. I’m not sure what the $3 per $1,000 in death benefit fee is in your statement. Regarding the dividends being dependent upon how much death benefit, I’m not sure if this answers your question (I’m not sure of the question) but a $50K policy for example will not generate as much dividends as say a $500K policy. As far as Guardian charging less than NML for paying monthly I have no idea. Paying monthly is not something I do on any of my policies because you are paying extra regardless of the company.

The rest of your questions will more than likely be answered by the information I need to fax to you. So if you could provide me with that number I will send you the rest of the information.

I guess written responses is not your agent's strong suit....

As far as Guardian charging less than NML for paying monthly I have no idea. Paying monthly is not something I do on any of my policies because you are paying extra regardless of the company.

Never? Really? Every single client has money to throw around for annual premiums? Impressive.

 

[mx_599]

I guess written responses is not your agent's strong suit....



Never? Really? Every single client has money to throw around for annual premiums? Impressive.

it is better to pay annual if you can? is this correct?

...but on my budget i would need monthly i think.

 

[dgoldenz]

it is better to pay annual if you can? is this correct?

...but on my budget i would need monthly i think.

Annual premiums are cheaper, but it seems a little strange that your agent "never" works with people who pay monthly.