Reputable? Whole Life with Northwestern Mutual...

[numbernut]

Hi,
Was just at a meeting with a NWM rep. He claimed he didn't know what the front load fees were for over-funding a WL policy. However I had him run some numbers and noticed that the first year $600 of overfunds increased cash value $565. Thus front load is 6% not the 9% mentioned earlier in this thread. Also NWM DOES pay dividends on LOANED funds but the div. is about 1% less than non-loaned cash value. The loan charge to the account is a fixed 8% for loaned out cv.

 

[BNTRS]

Hi,
Was just at a meeting with a NWM rep. He claimed he didn't know what the front load fees were for over-funding a WL policy. However I had him run some numbers and noticed that the first year $600 of overfunds increased cash value $565. Thus front load is 6% not the 9% mentioned earlier in this thread. Also NWM DOES pay dividends on LOANED funds but the div. is about 1% less than non-loaned cash value. The loan charge to the account is a fixed 8% for loaned out cv.

This is incorrect, the cash value quoted in the illustration is an end of year number, there will be come cash value growth, NML does charge 8% on PUA's.

Additionally the bit on the loan information is also correct. NML has an option between a fixed and variable rate. The variable rate is much lower than the fixed rate, the div rate on loaned values is also significantly lower when choosing the variable rate.

 

[xrac]

i decided to go with guardian

Good choice in my opinion.

 

[numbernut]

Right end of year cv, doah! The fixed loan rate seems concerning only in relation to todays low interest rates. Should 80's style rate s appear 8% would seem low for a loan.

 

[BNTRS]

Right end of year cv, doah! The fixed loan rate seems concerning only in relation to todays low interest rates. Should 80's style rate s appear 8% would seem low for a loan.

Yes, but this is again is only focusing on part of the total issue. If you lent money to yourself with NML in a high interest rate environment, their treatment of Direct Recognition would kill you. as it would drop the loaned portion div rate below the loan interest rate.

 

[numbernut]

their treatment of Direct Recognition would kill you. as it would drop the loaned portion div rate below the loan interest rate.

From what I have been told this is already the case. My NWM rep told me that my fixed rate loan would be 8% and the div. would be ~5% thus I would owe my policy ~3% per year...???

Is this bad compared to Guardian? What is the standard cost to loan ones-self money out of a WL policy?

Tnx much!

 

[BNTRS]

From what I have been told this is already the case. My NWM rep told me that my fixed rate loan would be 8% and the div. would be ~5% thus I would owe my policy ~3% per year...???

Is this bad compared to Guardian? What is the standard cost to loan ones-self money out of a WL policy?

Tnx much!

You're NML agent is incorrect, the good news is it's actually better than he's described it. The div rate on a loaned portion is 7.45% not 5%.

Guardian is better their loaned div rate is 7.9%, and after 20 years it's 8.4%. After age 65 and 20 years (whichever is longer) the loan rate drops to 5% with guardian and the div rate on loaned portions also drops to 5.4% (or 5.8) can't remember exactly at the moment. In either case, it's higher than the loaned rate after 20 years and very close from the beginning.

 

[numbernut]

Ummmm so they pay me money to borrow from my policy???

Honestly I must be missing something.

From Mass. Mutual document:
"It is important to understand that taking partial surrenders
or loans from your whole life policy will reduce both your
cash value and death benefit, and that accruing policy loan
interest will increase your policy loan and could cause
your policy to lapse."

 

[achuwsb]

OP:

If you have No NEED for GUARANTEED LIFE INSURANCE DEATH BENEFIT why whole life?? participating mutual of otherwise?? If you are overfunding a policy Whole Life IMO would definitely NOT be the appropriate choice.

Why not an Indexed UL?? there are numerous large reputable companies that offer IULs often times I find that IULs have significantly lower expenses(i.e. cost ratios, loan interests, Premiums, etc.) AND it offers greater funding Flexibility. Cash Value grows according to an Index interest gains as high as 25% with NO investment risk. way better IRR.

 

[Norwayguy]

OP:

If you have No NEED for GUARANTEED LIFE INSURANCE DEATH BENEFIT why whole life?? participating mutual of otherwise?? If you are overfunding a policy Whole Life IMO would definitely NOT be the appropriate choice.

Why not an Indexed UL?? there are numerous large reputable companies that offer IULs often times I find that IULs have significantly lower expenses(i.e. cost ratios, loan interests, Premiums, etc.) AND it offers greater funding Flexibility. Cash Value grows according to an Index interest gains as high as 25% with NO investment risk. way better IRR.

You have to be joking about IULs having significantly lower Expenses, just compare the cost of an IUL to a regular UL and you will see there is more internal cost.