Whole life 1035 Exchange

[Newyork99]

I had a 600k death benefit WL policy from NY Life which was created in 2011. In July of 2017, the agent who had moved from NY Life to MM, transferred the policy to Mass Mutual and bumped up the death benefit to 1.1 million. From March till July of 2017, he asked us to sign many documents, we did without reading what was in them because we had known him for years (its lot more complicated). One of the docs was the acceptance of delivery of policies. After the 30 day free look period was over, he told the policies were created and showed us the illustrations for the first time. I made a complaint with the state dept of banking and insurance but that did not help. I estimate the damage of the transfer cost us about 40k. It has been four years since. Has similar thing happened to anyone. Are there any to options to minimize the loss. Thank you for your time.

 

[Allen Trent]

I had a 600k death benefit WL policy from NY Life which was created in 2011. In July of 2017, the agent who had moved from NY Life to MM, transferred the policy to Mass Mutual and bumped up the death benefit to 1.1 million. From March till July of 2017, he asked us to sign many documents, we did without reading what was in them because we had known him for years (its lot more complicated). One of the docs was the acceptance of delivery of policies. After the 30 day free look period was over, he told the policies were created and showed us the illustrations for the first time. I made a complaint with the state dept of banking and insurance but that did not help. I estimate the damage of the transfer cost us about 40k. It has been four years since. Has similar thing happened to anyone. Are there any to options to minimize the loss. Thank you for your time.

Was the estimated loss of 40k what you calculated to be from premiums you paid to NY Life? If so, that 40k was due to fees in the early years of the policy, not because of the transfer. Without knowing the premiums of each policy & the type of coverage of the Mass Mutual policy, cannot even guess if this was an improved policy or not. Extremely unlikely you could get $1M for same cost as 600k especially because you were 6 years older & both companies are pretty good whole life companies

 

[Newby]

I had a 600k death benefit WL policy from NY Life which was created in 2011. In July of 2017, the agent who had moved from NY Life to MM, transferred the policy to Mass Mutual and bumped up the death benefit to 1.1 million. From March till July of 2017, he asked us to sign many documents, we did without reading what was in them because we had known him for years (its lot more complicated). One of the docs was the acceptance of delivery of policies. After the 30 day free look period was over, he told the policies were created and showed us the illustrations for the first time. I made a complaint with the state dept of banking and insurance but that did not help. I estimate the damage of the transfer cost us about 40k. It has been four years since. Has similar thing happened to anyone. Are there any to options to minimize the loss. Thank you for your time.

Yes, right before Igot into the insurance business a crooked agent flipped my 2-million dollar whole-life policy into a 3-million dollar UL policy and led me to believe it was the same thing for more death benefit.
I never found a good attorney that understood insurance even though I paid for the services of two. So I dropped the fight and moved on with my life. I did notice the agent was working at Wal-Mart a year later and had been a 10-year life insurance agent prior to that. So hopefully my complaint did that much.

 

[Newyork99]

The annual premium for the 600k NY Life policy was 12.5k and for 1.1 mil MM policy is 22k. The crook of an agent transferred the policy so he could max his commission without having any regard to the financial well being of the client. In my case, the first year premiums which goes toward the agent's commission was paid twice which is not right. The public should be protected by such low life unethical agents. I suspect there are few such agents out there. The ethical agents should join hands to get rid of the few bad apples from selling life insurance policies.

 

[Allen Trent]

The annual premium for the 600k NY Life policy was 12.5k and for 1.1 mil MM policy is 22k. The crook of an agent transferred the policy so he could max his commission without having any regard to the financial well being of the client. In my case, the first year premiums which goes toward the agent's commission was paid twice which is not right. The public should be protected by such low life unethical agents. I suspect there are few such agents out there. The ethical agents should join hands to get rid of the few bad apples from selling life insurance policies.

Wow. Those policies do seem extremely similar. From a distance it seems like no reason to replace NY Life. Could have just added the extra 500k. Not good unless there is some other unknown details.

 

[Newyork99]

There was no other reason at all except for the cunning low life of agent who was after nothing but his commission.

 

[DHK]

The space between policies is 6 years. He must've done a 1035 of 6 years of cash values from the old NYL policy to the new Mass policy.

I'm sure you have an insurable need of $1.1 million+. Anyone earning $50,000+ has that insurable need.

Let's sum up:
- He increased your total protection from $600k to $1.1 million.
- He did a 1035 exchange (tax-free exchange) of the existing cash values, hence all the documents signed.
- You could afford the new premium for lifetime coverage of $1.1 million.

I'm not seeing the issue except you don't like it now?

A truly unethical agent would've done all this within the first 2-3 years... not 6 years.

What am I missing?

 

[Newyork99]

The agent was let go from NY Life in 2016 for what I was told many unethical actions, he then joined Mass Mutual. It was since 2016 that he bothered endlessly wanting to transfer policy to MM. That is the reason why NY life policy survived for 6 years. If he was an ethical person, in 2017 he would not have touched the NY Life policy, instead create a new 400k policy with MM.

 

[DHK]

I'd need to see the policies to verify your assertions. However, my assertions don't count.

Saying he's unethical is an assertion, not a fact. True, he could have just sold a separate policy, but there may have been a justifiable reason NOT to. A better underwriting rate class? A better loan rate against the current policy values? The FACT that he could not service your NYL policy after leaving? NYL could have created their own problem because of how difficult it can be to be a broker after having been a captive career agent with them.

Btw, it's also (unfortunately so) a common practice to DISSUADE existing clients from following their agent through slander. This happens far more on the investment wirehouse side (Merrill Lynch, Morgan Stanley, etc.), but this was probably said in order to keep your policy in-force and encourage you to stay with one of their remaining IN-HOUSE agents.

Unless you have PROOF of wrong-doing, I wouldn't count on that assertion.

Check his broker-check record for complaints. That would be an excellent place to verify. However, since MassMutual has similar compliance requirements as NYL, somehow, I doubt you would find anything.

So, what else am I missing other than heresay?

 

[DHK]

So let's sum up (again):

NYL agent originally sold a $600k WL policy with premiums of $12.5k per year.

Same agent leaves NYL to go to MassMutual.

Because the now MassMutual agent cannot service the NYL policy, BUT can replace the policy AND create substantially similar premiums while increasing coverage (looking at a cost per thousand), replaces old NYL policy for the MassMutual policy for a total of $1.1m of coverage for $22k annual premiums while doing the 1035 exchange to preserve the tax status of the existing cash values.

Oh, and did the replacement 6 years after the original policy was in-force, thereby being in compliance with his non-solicitation agreement (not to replace for 2 years). Which is also pretty damn good because you're 6 years OLDER and STILL got substantially similar premiums.

I see absolutely nothing wrong with this.